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I would expect the S&P Mid-cap index to continue to out-perform the
S&P 500 index. In the same manner I'd expect the S&P Small-cap index
to continue to out-perform the S&P Mid-cap index.
The dip in your ratio from the beginning of 1994 to the beginning of
1999 is very surprising - the dip during those 5 years suggests to me
there was perhaps an over-investment in the S&P 500 stocks. That
over-investment may be unwinding as P/E to growth ratio's for the S&P
500 continue to drop back to more reasonable levels.
S&P 500 stocks would seem even more over-valued if stock options were
accounted for properly - one recent study indicated stock options
tended to be used most heavily in large-cap stocks. You would think
stock options would be used most heavily in smaller companies that
perhaps can't afford the highest salaries.
> -----Original Message-----
> From: Gary Funck [mailto:gary@xxxxxxxxxxxx]
> Sent: Saturday, April 13, 2002 4:06 PM
> To: Realtraders@xxxxxxxxxxxx Com
> Subject: [RT] Mid-cap relative strength - top out, or more
> of the same?
>
> Leaving the question can the mid-caps continue their run
> from here, or is it
> time for them to stall, and for their relative strength to
> revert to the longer
> term mean of about 0.37 of the S&P 500?
>
>
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