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HIGH BETA STOCKS NOW RISKIER THAN BEFORE CRASH OF 2008

23 April 2010 by Cullen Roche 5 Comments

The outperformance of high risk assets has been notable this year.  The Russell 2,000 small cap index is now up an astonishing 25% from the February lows and up 15% in just the first four months of 2010.  Meanwhile, the S&P 500 is up 15% from the February low and up 8% year to date.  The discrepancy between small caps or higher beta stocks hasn’t been this notable since just before the market crash of 2008 when investors were complacently pouring into small caps and ignoring various market risks.  Over the following 6 months the Russell 2,000 proceeded to lose 55% while the S&P lost 45%.

Disclosure: Author is short Russell 2,000 and long S&P 500.

Cullen Roche

Cullen Roche

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Comments
  • Frederick

    TPC: Within the Russell 2000 there are a lot of individual charts that are absolute vertical moonshots. A lot of these stocks are hitting all time highs, let alone multi year highs. This is starting to feel like a panicky land grab.

    Ben and Co. still feel a need for 0.00% Fed Funds Rate, though.

    04/23/2010 at 8:21 AM
  • David

    You can never loose money in real estate… I mean stocks.

    04/23/2010 at 8:43 AM
  • RSDallas

    Tic Tock Tick Tock Tick Tock

    04/23/2010 at 10:22 AM
  • LVG

    Even a wet turd makes money in this market. This is almost like reliving the NASDAQ bubbble. Loving it.

    04/23/2010 at 10:29 AM
  • TE

    Anyone know of a high beta index out there since the NYSE discontinued the $NHB?

    04/24/2010 at 11:20 AM