It’s Time for Investors to Think Small
Alex Moschina|September 4, 2024
Are you enjoying the “small cap-aissance”?
The mere promise of lower rates has led to a flurry of buying activity in the sector.
And now that Jay Powell has officially showed his hand and indicated rate cuts are coming just weeks from now… it’s really on.
The iShares Russell 2000 ETF (IWM) was recently up more than 20% from where it stood a year ago.
And as Robert told us yesterday, small caps should be the biggest winner as rates come down…
The asset class benefits disproportionately from lower interest rates and increased economic activity. During the 2019 rate cut cycle, small cap stocks surged as investors flocked to more growth-sensitive sectors. We saw this again in 2003 – following the early 2000s recession – when small caps outpaced large caps as the Federal Reserve lowered interest rates to stimulate economic growth.
In fact, during periods of easing, small cap stocks tend to outperform large caps by a significant margin.
He pointed to data from Russell Investments that showed small caps beat large caps by an average of 2% during easing cycles.
Robert has been capitalizing on the trend for some time in his popular Breakout Fortunes research service. One small cap play he recommended at the end of 2023 – a disruptor in the building infrastructure space – has already more than doubled.
Shah has also seized on the opportunity in small caps. Just this morning he followed up on a trade he recommended in Launch Investor on August 14.
In just 21 days, the play has jumped more than 34%.
Not too shabby.
It’s exactly the sort of company Shah’s proprietary L.A.U.N.C.H. system has been built to detect.
In case you’re unfamiliar, L.A.U.N.C.H. stands for:
- Leaders
- Acceleration
- Unique edge
- Numbers
- Capitalization
- Heat factor.
Each bullet represents a key piece of how he evaluates the market’s most disruptive stocks. It’s how he separates the turkeys from the tiny few who are destined for greatness.
And it’s been especially useful, recently, in the realm of AI.
In fact, Shah’s L.A.U.N.C.H. system has pinpointed three tiny companies that stand to crush Nvidia (NVDA), Microsoft (MSFT), and Alphabet (GOOGL)… with up to 2,100% in upside targeted in the next three years.
They’re the sort of companies you should know about… NOW.
Alex Moschina
Alex Moschina is the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.
