The January effect is the tendency of low price, small-capitalization stocks to outperform in January.

FORBES: Why There May Be A January Effect For Large-Cap Stocks

The Russell 2000 index of small-capitalization stocks added 0.3%, also its highest close ever.

WSJ: Blue Chips Finish Strong

The Russell Investments index of 2000 small-capitalization companies, meantime, notched a record on the first day of the year, and has climbed higher since then.

WSJ: S&P Milestone Marks Investors' Embrace of Stocks

For the year, the Dow Transportation Average and the small-capitalization stocks have been hit the hardest, as both are down close to 13% for the year.

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Mr. Kunze said the firm's "road show" marketing efforts met strong demand from investors in small-capitalization stocks who have an interest both in technology and financial sectors.

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Meanwhile, small-capitalization stocks have run up 36% since early October, pushing the Russell 2000 small-cap index to within 4% of the all-time high that it hit last April.

WSJ: Dow Closes at Highest Level in 4 Years

J. offices, he invests mostly in small-capitalization stocks.

FORBES: Doubling Down

Investors who are worried, or who are at a stage in their lives when they simply can't handle another downturn, can always reduce their exposure by selling some of their stocks and mutual funds, or by switching from more-volatile stocks, such as small and midsize companies, to high-quality large-capitalization companies.

WSJ: Upside: As Stocks Surge, Is It Time for Some Protection?

The AmSouth Small Cap Growth Fund, with a 5.5% load and 1.6% expense ratio, has beaten the Target Small Capitalization Growth Fund, which is a no-load and charges 1%.

FORBES: 2004 Mutual Fund Survey

In investing I would argue that the best long-term returns come from three great ingredients: value, small capitalization and dividends.

FORBES: For Total Return, Look To Small-Cap, Dividend-Paying Value Stocks