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Byline: DAVID SAITO-CHUNG
In 2003, small-cap stocks straddled the bull's back while large caps hung on by the tail.
Despite a sharp drop Wednesday, the small-cap S&P 600 index ended the year with a 37.5% gain, second only to the Nasdaq, up 50%. The 600's advance blew past the 26.4% rally by the S&P 500 large-cap benchmark.
Since April 2000, the small-cap S&P 600 has gained 29% while the 500 has lost 26%. While the large-cap indexes fled to new multiyear lows in 2002, the 600 logged all-time highs in mid-April.
Given that smaller issues have dominated for more than four years, is the market going to see a reversal of this trend? Some market pros think so, yet others disagree.
For the individual investor, the debate is academic. IBD's CAN SLIM system favors companies that have the biggest increases in earnings and revenue, the fattest profit margins and a leadership role in a dynamic industry or market niche.
Those that show the highest relative price strength and jet out of solid bases to new highs tend to forge the biggest gains, regardless of their market cap.