We've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.
For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.
That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.
We expanded our universe to include some mid-caps.
Nowadays, to make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.
If you want to know what's moving markets this week, and how we're thinking about profiting from it, then the Morning Show is for you!
Today's guest is fellow twin-boy dad Todd Gordon, Portfolio Manager at Inside Edge Capital. Todd is an old pal, veteran trader and world class skier. You're not going to want to miss this conversation!
The Mötley Crüe song title comes to mind: Same Ol' Situation.
It's always the same questions. Every bull market.
How much higher can stocks possibly go? Was that last high the top? Why is the economy not as strong as the stock market?
That's the thing. We want to pay attention to what's happening around us. Because we've seen it before and we'll see it again. It's just humans being humans.
I like to turn to the data and weigh the evidence so we can try to make the most informed decisions possible.
The way I see it, this has been a bull market for quite some time, well into year 3 now. Whenever a lagging sector has been most vulnerable to break down from a major top, the opposite has happened.
We had a discussion in the All Star Options chatroom yesterday about differences of opinion that got my mind spinning in a very positive way.
Sometimes, we traders might get a little offended when we've done the work to come up with a trade idea and share it with others -- then someone else offers a hot take on why the originator of the idea might be wrong. For some of us, we get momentarily annoyed, then we forget it and move on. For others, the "new information" causes us to abandon our trade thesis all together, sending us back to the drawing board in a state of frustration.
In the worst case, the originator of the idea gets offended, defensive, and perhaps even verbally abusive. And then both sides engage that way and nothing good comes from it.
I'd argue my best response is to meet the counter-intelligence as an opportunity to dig deeper to see if perhaps I missed something? If I find that I have, great! I'm better for it. If not, then I'll just end up feeling better about my opinion.
But the real meta thought here is this: WE WANT PEOPLE TO DISAGREE WITH OUR IDEAS.
We're in the 3rd year of a bull market and sector rotation continues to be a dominant theme that's driving stock prices higher, and probably more importantly, not allowing them to go lower.
Also during corrections, you regularly see rotation into the more defensive stocks, like Consumer Staples. You don't have that either. In fact, Consumer Staples just closed at new all-time lows relative to the S&P500.
