Video: Market Performance by Market Cap

A quick look at stock market performance by market cap slices. Simply put, smaller cap stocks (e.g., Russell 2000 (IWM)) tend to outperform larger cap stocks (S&P 500 (SPY) used in the video) during “risk-on” market cycles. This is probably driven by investor psychology and investors’ attitudes toward risk in the market. If we understand this, the persistent performance of smaller caps through 2014, which lines up with a period of mostly sideways market prices, is not so troubling. Some charts and a look at a slightly longer historical perspective in the video help to illustrate these points.


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 4 Comments

  1. Michael

    Interesting video. I have read parts of your book, and it’s excellent. I loved the discussion of how to measure performance using statistics. (p 0). Really helped to clarify my thinking a lot!

    1. Adam Grimes

      Thank you! I think being certain you are doing something has a statistical edge is a very important place to start.

  2. A_Joe

    Thank You ! if we Measure Relative strength of 1) Performance of Index (of say 50 Stocks) with respect to the 2) Measure of Top Weightage Stocks ( around 10 Stocks comprising of 25 to 30% Weight ) in that index — Can it be used as leading indicator to assess strength of Market Structure.. Request your views

    1. Adam Grimes

      Not a test I’ve done specifically. The logic is sound, but I’d also consider the flip side of that coin: mean reversion. There’s probably a way to use that information, but I haven’t done any specific work on this question. If you do, I’d be curious to see what you come up with. Interesting idea!

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