Thoughts from the Frontline

Re-Setting the Investment Scales

By John Mauldin

June 14, 2002

Is the Run in Small Cap Stocks Over?
Where’s the Growth?
Thoughts on a Bear Market
Re-setting the Scales
Modern Portfolio Families
And Much More!!

The news all seems so bleak sometimes. But is it? If my view that we are in a Muddle Through Economy is to prevail, then we surely must be seeing some good news somewhere. In this issue, I find some good news, some bad news and highlight a recent study which shows that the run in small cap stocks may be coming to an end. And much more, of course. Let's jump right in.

Is the Run in Small Cap Stocks Over?

There is reason to think it might be. Small cap stocks have outperformed large cap stocks by 100% over the last three years. "Cap" is short-hand for stock market capitalization. Small cap means the stock market value of the companies are small and vice versa.

Myles Zyblock of Brown Brothers Harriman did a study, looking back over the last 75 years, and finds that…

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