Small-cap stocks are beating their bigger rivals. The Russell 2000 Index RUT, -0.08% is up 6.5% this year, compared with 2% for the S&P 500 Index SPX, -0.24% of large-cap stocks. This outperformance makes sense for three reasons. First, small companies are leaner. So they benefit more than larger companies from inflation, which appears to be heating up. As lean machines, more of the extra revenue drops to the bottom line. They also benefit from the strengthening dollar more than large companies do. Big companies get more earnings abroad. A stronger dollar diminishes those foreign earnings in the translation back home to U.S. dollars. Small, domestic companies don’t have that problem. Small-cap investing maven Jim Callinan has his own theory on why small is beautiful — small-cap growth, that is.via