After years of trailing larger companies, small caps have outperformed the S&P 500 over both the past quarter and the past year. After years of trailing larger companies, small caps have outperformed the S&P 500 over both the past quarter and the past year. Scott writes (emphasis mine):For much of the past year, investor attention has been centered on the ‘Magnificent Seven’ and other mega-cap technology stocks. Small-cap stocks entered 2026 trading at one of their largest discounts to large-cap stocks in decades, creating an attractive starting point for investors. And small-cap growth stocks (Russell 2000) were down 2.97 percent.