Research shows that large-cap stocks historically outperform small caps in the fourth quarter, says Mark Hulbert, editor of Hulbert Financial Digest.

"To exploit these tendencies, you should more heavily weight your equity portfolio toward large-cap stocks from now until the end of the year, at which point you would tilt toward small caps," he writes on MarketWatch.

You want to make the switch because small caps outperform in the first quarter, Hulbert says.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

Nobel laureate economist Eugene Fama and Dartmouth College finance professor Kenneth French have looked at the numbers going back to 1926. They found that the largest 10 percent of stocks by market cap outperformed the smallest 10 percent by 3 percentage points on average during the fourth quarter, Hulbert reports.

Meanwhile, in the first quarter small caps topped their larger brethren by an average of 8.8 percentage points.

Money managers' shifting attitudes toward risk during the year account for the different results, Lucy Ackert, a finance professor at Kennesaw State University, tells Hulbert.

At the beginning of the year, managers are willing to accept the higher risk of small-cap stocks because of their potential for higher gains, while late in the year managers seek large caps' safety.

James Swanson, chief investment strategist at MFS Investment Management, is bullish on large-cap stocks.

"Many large-cap companies are growing with a limited amount of leverage. Their ability to grow at this rate shows that they are doing it in a much more organic fashion and are not overextended with debt to finance their growth," he said in a talk last week, Financial Advisor reports.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

Related Articles:

• WSJ: Small-Cap Stocks on Fire
• Janney Capital's Luschini: Consider Small-Cap Stocks in Europe