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New York Stock Exchange, Stock market, Stock Why these investors are adding to their 'winner' stocks

If you go back to 1980 and you look at the eight recessions in each one of those recessions, it was the equity size class of small caps that led the economy out of the recession. So i i can look beyond the us. I could see the economic optimism that’s represented by the performance of the emerging markets and the chinese equities market, and then i could look back here in the u.s and i could see that small caps. They are squarely positioned to benefit most. Why? Because they have the interest rate sensitivity and they are viewed as companies that have weaker balance sheet, so a company in a weaker balance sheet in an environment as we’ve experienced over the last six months, where certainly, we saw economic contraction as you’re coming out of that That’S the place to be it works for both small cap value and growth. They’Re both performing well understand health care is the primary sector within the russell. So there is a large focus on health care, but it goes beyond that. It’S, energy, it’s, financials and it’s. Certainly, a place that investors should be and should continue to be, carrie let’s, not forget right. Small caps, mid caps usually lead on the way up, usually lead on the way down so better if you’re along the market, that small caps and the russell are going up in the manner in which they have it’s been pretty astounding, that’s right. Scott now what’s particularly interesting about small caps and and i would define it as any stock between 300 million and 2 billion market cap.

There are about 1500 of those names total that are publicly traded in the us, and if we went back to september, the the total value of all those companies was about 900 billion dollars. Apple is more than twice that if you look at microsoft and amazon amazon, each of those companies are much more than the entire universe of small caps. Therefore, in september i looked at data i talked about this a couple weeks ago. I think, on the show you could make the the statement that a five percent decline in some of those mega cap stocks drove the small caps up 30 plus percent, because that’s all it would take to move the needle from 900 billion to where they are now, Which is about 1.3 1.4 trillion over the course of the last several months? I think that you, you need to understand that in some of these sectors biotech there is much more risk in some of those companies and they don’t have a multiple, because there’s, no earnings and financials and industrials will be much more likely to be selling at reasonable Market caps, yes, more risk more return because you’re starting at a lower base, that’s what the market looks at and that makes sense for investors. We recommend and we do uh own this type of portfolio. We have a mix of names that are a billion market cap and names that are 2 trillion market cap. So if you run the gamut, you have some protection on the capitalization side and diversification by industry sector and by multiple.

How expensive is. The company is also important to consider when you’re building your own portfolio yeah, why small caps big names, though right shake shack’s up 54 just year to date, congrats to josh brown on that, as he told us yesterday, he was adding to that stitch. Fix is up 48, i mean some of these names. Um are, you know fairly widely held. Macy’S is up 37. You get a housing play and kb home up 29 papa john’s 26 wingstop 25 names. We don’t talk about every day. We should give these companies more credit. 2 6 is a company. You own is up 24 yeah, 2 6 reported a great quarter yesterday. So it’s following through it’s, got lots more upside in the right space optical lasers. 5G. I agree with everything that kerry said. I agree with everything joe said, but let me take it one step further and what you just mentioned, i think, proves that my case i’m, not really looking at the indices. I mean it’s great. I look at it in terms of just fun to look at, but i’m really bottoms up and every stock that you mentioned meaningfully outperformed the indices. So it truly is a stock pickers market. You can add to those names, small ones viewsix, which has gone from from three and a half up to 15, or you can go with a stock like moderna, which was small cap and now it’s, 70 billion, so it’s really about the momentum in the fundamentals.

As you saw, as you said, with 2 6 and in the others, they all have solid fundamentals. So if you don’t have the ability to do your own work or have access to people that do then buy the indices. But if you can do your own work, there’s a lot of themes out there that are trading, whether it’s 5g or some others that we’ll get to so it’s, thematic trading and it’s single stock, with idiosyncratic stories and that’s. Where i continue to find opportunity, i don’t find bubbles.

What do you think?

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