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Analyst: Small-Caps Stay Strong For 2007

The market’s measure for small-caps – the Russell 2000 – hit an all-time high Tuesday of 797.42. It’s up 19% year-to-date – besting the Dow , Nasdaq and S&P 500 . Jim Furey – managing director and head of small-cap strategy at Lehman Brothers – sees the trend continuing. He predicts small-caps will “modestly outperform” large-caps in 2007.

Either way, Furey – who appeared on "Squawk on the Street" this morning – says next year will be a good year for stocks – whether large-cap or small-cap. Gains for each could jump almost 20% – he says. All the money that for the past few years has been in the housing sector is going to work its way back into equities.

Furey agrees that small-caps are more susceptible to a weaker dollar – but over the long term he seems them trending upward.

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