Stocks Set to Soar: The Underrated Tailwind and Small Cap Surge

Despite the stock market's strong performance in 2023, a significant number of professional investors are still underperforming their benchmarks, according to data from Fundstrat. Around 65% of large-cap fund managers are trailing their benchmark by an average of 6.5%. This underperformance could lead investors to chase this year's winning trades in the final weeks of the year, potentially putting pressure on them to catch up. The concentrated gains of popular stocks like Apple, Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia have contributed to the performance challenges for large-cap managers. This year's market rally, led by a few stocks overrepresented in the index, has created a perfect storm for active managers.