Horizon Investments’ tactical investing style can think of no better example of the value of being nimble than the reversal of this year’s equity market trends, namely large-cap over small, and growth over value. And that change is best seen by looking at how much Apple is worth versus an entire index.
The flagship small-cap index, the Russell 2000, went from being worth $1.35 trillion more than Apple at the start of 2019 to being worth $35 billion less than Apple on September 1, 2020. That date isn’t random – it is a few days after Apple’s 4-for-1 stock split and the most recent changes in the Dow Jones Industrials Average (Big Number from Sept 3). A global pandemic and the trade war with China hampered the ability of smaller, more fragile companies to operate and drove investors to concentrate their funds in the largest companies with business models less sensitive to economic growth. That’s being unwound and may signal the stock market is entering another multi-year period where being the little guy becomes a key factor in outperforming the benchmark S&P 500.
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