Did you know that US smallcap stocks are often perceived as a reliable economic barometer of US economic activity? In the aftermath of an economic recession, small-cap stocks typically outperform large-cap stocks.

This may be due to several factors such as investors’ renewed appetite for risk or small caps’ greater sensitivity to economic developments.

In this article, we utilise historical data from the Russell 1000 & 2000 Indices to investigate this phenomenon. We then examine the returns of the Russell 1000 & 2000 during Black Thursday 2020 and their potential future outcomes.

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