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Leadership Cycles

Apr 07 2023

The Cycle That Never Was

  • Apr 7, 2023

At 144 months, this is now the longest Large-Cap cycle on record, but its dominance will have to prolong to eclipse the second-longest leadership phase (1946-1957), in which Large Caps achieved a 190% performance spread above Small Caps.

Mar 10 2023

Small Caps: We’ve Seen This Setup B-Four

  • Mar 10, 2023

In mid-2020, we wrote that a new multi-year leadership cycle had probably begun. Technically, that belief hasn’t been disproven, but the extent of outperformance has been disappointing in the nearly three years since. 

Sep 08 2021

Not Overthinking Small Caps

  • Sep 8, 2021

There are some positive cyclical influences for Small Caps, like higher inflation and deeply negative real interest rates. But in our minds, the valuation spread versus Large Caps is more important. 

Aug 06 2021

A Look At The Small-Cap Setback

  • Aug 6, 2021

The Russell 2000 has blown the 14% lead it had built against the S&P 500 earlier this year, and now trails the index by almost 5%. Has that type of intra-year reversal happened before, and, if so, did it portend a major change in leadership?

Jun 05 2021

A Small-Cap Theory Of Relativity?

  • Jun 5, 2021

Small Cap median valuations are among the highest in our 40-year database, but they are bottom quintile versus the nose-bleed level of the median Large Cap. If this Small Cap leadership cycle only matches the shortest one on record, it will last another three years. Based on the valuation gap, that guess seems conservative.

Jul 08 2020

The “Next Big Thing” May Not Be Big

  • Jul 8, 2020

There’s one trend that’s lasted almost as long as the bull market and economic expansion and it hasn’t definitively come to an end. The current Large Cap Leadership Cycle hit the nine-year mark in April.

Apr 06 2020

Leadership Rotation And Bear Markets

  • Apr 6, 2020

Bear markets are the financial system’s version of the changing seasons—a cycle we “enjoy” to extremes here in Minnesota.

Nov 07 2019

Can New Reins Take Hold Of An Old Bull?

  • Nov 7, 2019

Three months ago, Large Cap Growth and Momentum were the winning ways to play the market; the long-time resiliency of these entrenched leaders was a cornerstone of the bullish case. Suddenly it’s Value and Deep Cyclicals leading, anything possessing Momentum, of late, has turned toxic. Ironically, this “new” leadership is now the foundation for the bullish reasoning.

Jul 05 2019

Big Is Still Beautiful

  • Jul 5, 2019

The 10-year-old bull grabs most of the headlines, but its younger sibling has begun to command more respect.

Dec 07 2018

It’s Not A Pause… It’s “Paws”

  • Dec 7, 2018

A bear market will almost always prove to be the catalyst of one or more shifts in long-term market leadership.

Oct 19 2018

Monitoring Mo’s Mojo

  • Oct 19, 2018

Momentum is one of the most successful investment styles over the long run, and does particularly well in the later stages of a bull market during the run-up to an eventual peak.

May 23 2018

Value Style’s 100-Year Flood

  • May 23, 2018

Value is the philosophical cornerstone of many legendary portfolio managers and is widely recognized as one of the most robust quantitative investment factors. Yet, despite its compelling conceptual merits and long-term record of superior returns, recent years’ underperformance of Value has lasted long enough to weigh on even 10-year performance records. 

Apr 06 2018

The Foreign Stock Conundrum

  • Apr 6, 2018

A good rule of thumb for thematic and sector investors is that stock market leadership rarely repeats itself in consecutive cycles.

Jul 08 2017

Small Caps Out Of “Phase?”

  • Jul 8, 2017

If one manipulates the data correctly, one can make the size effect—whereby Small Caps earn excess returns over the long pull—look instead like a beta effect.

Sep 08 2016

EM Leadership: Just The Beginning?

  • Sep 8, 2016

Our EM Allocation Model triggered a BUY at the end of August after 5 1/2-years in bear mode. This upgrade is consistent with a cyclical leadership run of one to four years relative to Developed Markets.

Sep 08 2016

Rotation Away From Low Vol?

  • Sep 8, 2016

An encouraging break from a 15-month leadership pattern: Low Vol stocks have rolled over since mid-July, while the High Beta cohort has finally eclipsed its late-April highs.

Jul 08 2016

Low Quality Dominance Since March

  • Jul 8, 2016

After two rough months moving into 2016, Low Quality stocks rallied and are now leading High Quality stocks YTD. Investors apparently brushed-off the slowdown scare from China, and later the Brexit headlines.

May 06 2016

Small Caps: The P/E Premium Lives On…

  • May 6, 2016

Small Cap valuations may look better on a relative price-to-book basis, but we still believe their Normalized P/E ratios will suffer further compression before Small Caps reclaim the leadership baton.

Jan 08 2016

Small Cap P/E Ratios: Not Yet Low Enough

  • Jan 8, 2016

When the Fed surreptitiously began to tighten as we believe (via tapering), in January 2014, history suggested that Consumer Discretionary and Small Caps would be the most likely initial market victims (at least from a relative perspective).

Aug 07 2015

Value, Momentum, And The Stock Market Cycle

  • Aug 7, 2015

Conventional measures of market action, like breadth and industry leadership, point to the formation of a bull market top. Divergences abound.

Aug 07 2014

Small Cap Premium Finally Shrinks—But Remains Historically Extreme

  • Aug 7, 2014

July’s Russell 2000 -6% rout finally deflated some of the Small Cap valuation premium we’ve been grousing about in recent years.

Jul 08 2014

Quality Stock Rankings: Low Quality Momentum Persists

  • Jul 8, 2014

Low Quality Momentum persists, and a look at how Valuation factors affect the Quality model output.

Nov 07 2013

How Long Can Small Caps Lead?

  • Nov 7, 2013

The Russell 2000 is about five points ahead of Large Caps YTD, and is approaching its April 2011 long-term relative peak. We view this outperformance as their leadership’s last gasp and not a new cycle.

Mar 06 2012

Small Cap Stocks: Hard To Make The Numbers Work…

  • Mar 6, 2012

Leuthold’s Doug Ramsey takes an in depth look at historical Small and Large Cap cycles and offers insight as to where we stand now and what can be expected going forward.


Feb 04 2011

U.S. Small Caps: Carving Out A Very Long Top

  • Feb 4, 2011

The current period of small cap leadership is the longest ever. And while small caps have been selling at a premium, the premium has persisted for a long time.


Nov 04 2009

Small Cap Appeal Is Fading

  • Nov 4, 2009

After already rallying substantially from the March lows, it will be tougher for small caps to continue their outperformance.

Jul 03 2009

The Stampede That Wasn't

  • Jul 3, 2009

A month ago we suspected June might see a big institutional rush into the stock market. The stampede never came, though, and the market finished essentially flat for the month.

Feb 04 2009

Positive Technical Trends

  • Feb 4, 2009

While there is plenty to worry about, some important technical trends still suggest that November 20, 2008 stands a good chance of being the final low of this bear market.

Jan 04 2009

December Market Action

  • Jan 4, 2009

2008 is over. We expect 2009 to be better since worst-case scenarios now seem less likely to play out.

Dec 02 2008

Bull Markets: The Best Comes First

  • Dec 2, 2008

New bull markets are front end loaded, with the strongest performance usually coming within the first few months. Study also shows that Small Cap Growth stocks tend to outperform their Large Cap and Value counterparts.

Nov 05 2008

Small Cap Stocks: An Extension In Leadership?

  • Nov 5, 2008

Small Cap leadership trend maybe re-emerging. Doug Ramsey examines Small Cap performance coming out of bear markets. Historically, they have been able to do well as higher beta plays.

May 06 2008

What Early Cycle Leadership Looks Like… An Historical Perspective

  • May 6, 2008

In the spirit of historical market research, we thought it would be a good time to revisit which industry groups perform best from bear market lows.

Apr 05 2008

Consumer Goods Stocks Versus Commodity Stocks: Identifying Long-Term Leadership

  • Apr 5, 2008

Are we asking the wrong question about Consumer Stocks versus Staples? This month’s “Of Special Interest” looks at the relationship between all Consumer groups (both Discretionary and Staples) compared to Commodity related groups.


Nov 05 2007

Cautious On Small Caps

  • Nov 5, 2007

Small Cap outlook continues to deteriorate. Despite recent underperformance, valuation premium is not shrinking.

Jun 05 2007

Large-Cap Growth: Could A Long Wait Get Even Longer??

  • Jun 5, 2007

Valuations set the stage for better performance out of growth.  But it is important to note that there’s precedent for the value cycle—seemingly already overextended in time and price—to get much more extended. 

Oct 04 2006

Is Performance Rotation Here To Stay?

  • Oct 4, 2006

Group rotation has made it tough for managers to outperform. There has been a lack of sustainable leadership.

Aug 05 2006

Characteristics Of A Bear Market

  • Aug 5, 2006

Assuming a bear market has already begun, what can be expected?

Mar 05 2006

Cyclical Stock Dominance — How Long Can It Persist?

  • Mar 5, 2006

An in-depth examination of performance relative to Growth stocks; what has been typical in terms of leadership duration; and how the economy and inflation may affect the current trend.

Aug 04 2004

View From The North Country

  • Aug 4, 2004

Terrorist threats, rising oil prices, the war in Iraq, and upcoming presidential election seem to have taken center stage against a backdrop of impressive corporate earnings momentum.

Aug 04 2004

Leuthold Ten Factor Small Cap Leadership Model Update: Still Neutral

  • Aug 4, 2004

Market seems to be moving toward a possible leadership transition from small/mid caps to large caps. Small caps significantly lagged large caps in July, and also now lag YTD.