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All at Once

December 23, 2020 by Brendan Mullooly

Like ketchup coming out of a repeatedly tapped glass bottle, it seems small cap stocks are finally rewarding investors in the fourth quarter of 2020.

Through September 30, 2020, it had been three years without return for small cap stock investors:

Small Caps thru Q3 2020 - Your Brain on Stocks

As if that weren’t frustrating enough, the S&P 500 was up over 40% during the same time period, making small cap’s poor performance all the more disappointing on a relative basis.

Since September 30, 2020, small cap stocks have gone wild:

Small Caps including Q4 2020 - Your Brain on Stocks

A refrain I’ve adopted from Ben Carlson of Ritholtz Wealth Management is that “returns are lumpy”. Over the last three years, small cap stock returns couldn’t have been any lumpier – nearly all the benefit came in just the last three months.

As far as I’m aware, there weren’t any signals or signs to pile into small caps in advance of this wild move, just as there weren’t any warnings back in the fall of 2017 to suggest small caps wouldn’t make money for three years.

This is just how investing works. Patience is usually rewarded, but the timing and magnitude of the reward cannot be known in advance. Those who are willing to bear that uncertainty get the benefit, and when they do, sometimes it comes all at once.

Filed Under: Investing Tagged With: investment management, small cap

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  1. Sunshine and Rainbows | Mullooly Asset Management says:
    January 2, 2021 at 2:36 pm

    […] As Brendan has eloquently explained many times, we can KNOW the future… but it still won’t help us, as investors. Brendan explains it extremely well in his post “All At Once.” […]

  2. What Can You Control? | Mullooly Asset Management says:
    January 7, 2021 at 3:45 pm

    […] ‘All At Once’ – Brendan Mullooly – Your Brain On Stocks […]

  3. The Market Doesn't Have Feelings | Mullooly Asset Management says:
    January 8, 2021 at 2:01 pm

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Brendan Mullooly, CFP®

Brendan Mullooly, CFP®

Brendan Mullooly is a New Jersey based CFP® professional and investment advisor at Mullooly Asset Management, Inc.

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The content on this website reflects the personal opinions, thoughts, and analysis of Brendan Mullooly. It should not be taken as a description of services provided by his employer. The opinions expressed on this website are for general informational purposes only and are not intended as specific or personalized financial advice. The views on this website are subject to change at any time without notice. Nothing on this website constitutes investment advice or a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is never a recommendation to buy or sell. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

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