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For instance, in 1996, the Russell 2000 gained 2.2% over its first month of gains and moved 8.4% higher over the following three months. Historical trends indicate that such a long stretch of gains has a tendency to continue. Additionally, Trump has pledged to renegotiate crucial trade agreements, which is also likely to benefit small caps. Additionally, small caps usually have the highest effective tax rates since larger internationally diversified corporations park a large share of their profits abroad. With financials, healthcare and energy stocks making up the bulk of small caps, the category is likely to benefit the most from these measures. Trump has promised to ease regulations, cut taxes and boost infrastructure spending. Most of Trump’s economic policies are likely to be focused on the domestic economy and will benefit small caps substantially more. Market watchers and analysts alike feel that while a Trump administration will be good for the broader markets, it will benefit small cap stocks even more. At that point, the Russell 2000 had gained 12.7% since Nov 8, significantly higher than the S&P 500’s advance of 3.5% registered over the same period. This fifteen-session long stretch of gains ultimately came to a halt on Nov 25. Additionally, the index registered its longest stretch of gains since Feb 1996 last month. Gains for the small-cap index were largely attributable to a rally sparked off by the results of the presidential election. While the Dow gained 5.4% last month, the Nasdaq notched up its highest gains since July, increasing 1.1%. The index moved 11.2% higher over the month, outperforming the S&P 500, which gained 3.4%. The Russell 2000 Index of small-cap stocks registered its best monthly gains since Oct 2011 in November. Investing in small-cap stocks with superior fundamentals will make for a profitable choice even in 2017.īest Monthly Gains for Russell 2000 in 5 Years Given the state of the economy and prevailing expectations about forthcoming policies, it is quite likely that such gains will continue into the New Year.
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This is why the category has set a frenetic pace ever since his surprise victory, easily outpacing the broader market’s gains.Īpart from a small dip last week, gains for this category have been more or less uninterrupted. Expectations that the Trump administration will introduce industry-friendly, domestic-focused policies have helped small caps post record gains over the last month.
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It seems that there’s no stopping small-cap stocks.