Each quarter we offer a piece of market trivia that we believe is interesting or timely, or both. Given the recent market swoon, we thought it made sense to publish a piece of positively biased trivia. The first chart below shows the percentage of times small caps have risen greater than 5% in a quarter. Historically, in the fourth quarter of the year small caps have appreciated more than 5% almost 50% of the time. We can dream, can’t we?
The second piece of market trivia is related to the performance of the stock market by market capitalization once the Fed raises interest rates. We’ve shown this chart before but given the proximity to a potential Fed rate hike, we thought it appropriate publish this chart again. Note how significant the outperformance is as one skews smaller. If the Fed hikes rates and this trend holds, it would reverse the trend of small caps underperforming which has been in place over the past 18 months and that we highlighted in the first section of this newsletter.