Mar. 27, 2014, 7:08 AM
- Major stock index futures are all ahead about 0.25% as equities look to bounce back from yesterday's slide. The Russell 2000 (IWM) took the biggest hit on Wednesday, falling 1.9%, and it's ahead 0.4% in the premarket.
- Europe's essentially flat, and the Nikkei gained 1% overnight while Shanghai dipped 0.8%.
- The 10-year Treasury yield bounces a bit from yesterday's big decline, up two basis points to 2.71%, and gold is down 0.6% and below $1,300 per ounce.
- ETFs: SPY, QQQ, SH, DIA, IWM, IJS, TZA, TNA, SSO, SDS, PSQ, IVV, VOO, UWM, SPXU, UPRO, TQQQ, VB, SPXL, QID, IJR, RSP, DOG, SLY, SQQQ, EES, QLD, DXD, RWJ, VBR, RWL, VBK, EPS, URTY, SCHA, UDOW, TWM, IWO, IWN, SDOW, DDM, IJT, RWM, SRTY, SAA, DWAS, BXUB, JKL, VTWO, QQEW, RZV, SLYG, QQQE, TRND, SLYV, VIOO, SFLA, SDD, RZG, JKJ, BXUC, RSCO, QQXT, SBB, UKK, VTWG, TILT, VIOG, BXDB, FYX, VIOV, FNDA, XSLV, FYT, SKK, JKK, PXSV, VTWV, EWRS, UVT, TNDQ, SPLX, TWOK, SMLV, SJH, IESM, FYC, VLU, PXSC, PXSG
Mar. 24, 2014, 7:37 AM
- The Russell 2000 (IWM) is trading for 49x earnings compared with a multiple of 39x at the height of the Internet bubble. The S&P 500 P/E ratio of 17.2x is within spitting distance of its 75-year average.
- The small cap gauge has returned an average of 30% per year since the March 2009 bottom vs. 25% for the S&P 500, but profits lately are not keeping up. In the last quarter, Russell 2000 profits climbed 6.8% vs. 8.6% for the S&P 500, and while S&P companies exceeded analyst estimates by 4.6%, Russell 2000 companies missed by 13%, according to Bloomberg.
- "Monetary policy action cannot be taken off the table as a response to the build-up of broad and sustained systemic risk," said Fed Governor Daniel Tarullo recently, sighting bubbly small caps as one thing being eyed at the central bank.
- ETFs: IWM, IJS, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, SCHA, TWM, IWO, IWN, IJT, RWM, SRTY, SAA, DWAS, JKL, VTWO, SLYG, RZV, SLYV, VIOO, SDD, JKJ, RZG, RSCO, SBB, UKK, VTWG, VIOG, TILT, FYX, FNDA, VIOV, XSLV, FYT, SKK, JKK, PXSV, VTWV, EWRS, UVT, TWOK, IESM, SMLV, SJH, FYC, VLU, PXSC, PXSG
Mar. 10, 2014, 2:48 PM
- "We are getting increasingly concerned about the extended nature of small-caps," writes MKM's Jonathan Krinsky, noting the Russell 2000 as of last week closed 42% above its 200-day moving average, the most in four years. A check of the records over the last 30 years when the Russell's been more than 40% above its 200-day finds forward returns 90 days out to be negative 94% of the time, with an average decline of 7%.
- He notes biotech makes up about 5% of the Russell 2000 and that sector's rally seems particularly unsustainable.
- Small-cap ETFs: IWM, IJS, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, SCHA, TWM, IWO, IWN, IJT, RWM, SRTY, DWAS, SAA, JKL, VTWO, SLYG, RZV, SLYV, SDD, VIOO, JKJ, RZG, RSCO, SBB, VTWG, UKK, FYX, TILT, VIOG, XSLV, FNDA, VIOV, SKK, FYT, EWRS, JKK, PXSV, VTWV, UVT, TWOK, SMLV, SJH, FYC, IESM, VLU, PXSC, PXSG
Mar. 4, 2014, 11:54 AM
- The Dow, S&P 500, and Nasdaq are all ahead about 1.25%, but the small caps are really breaking out, with the Russell 2000 up 2.8%, at an all-time high, and now ahead 4% on the year vs. a 1.4% gain for the S&P 500.
- The index's gain over the last month sums to nearly 11%. Last week, Ryan Detrick noted the Russell was up 14 of the previous 15 sessions for the first time in its history.
- ETFs: IWM, IJS, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, SCHA, TWM, IWO, IWN, IJT, RWM, SRTY, DWAS, SAA, JKL, VTWO, SLYG, RZV, SLYV, VIOO, SDD, JKJ, RZG, SBB, RSCO, VTWG, UKK, FYX, TILT, VIOG, XSLV, SKK, VIOV, FYT, FNDA, JKK, PXSV, EWRS, UVT, VTWV, TWOK, SMLV, SJH, FYC, IESM, PXSC, VLU, PXSG
Feb. 26, 2014, 12:42 PM
- The major averages are posting moderate gains thus far in the session, but it's another big day for the small caps, with the Russell 2000 ahead 1.3%. Off 6% for the year around the start of February and lagging the S&P 500, the small cap gauge is now up 2.3% YTD, at a new all-time high, and ahead of the S&P by 190 basis points thus far in 2014.
- Small cap ETFs: IWM, IJS, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, SCHA, TWM, IWN, IWO, IJT, RWM, SRTY, SAA, DWAS, JKL, VTWO, SLYG, RZV, SLYV, VIOO, SDD, JKJ, SBB, RSCO, RZG, VTWG, UKK, TILT, VIOG, FYX, XSLV, VIOV, SKK, FYT, PXSV, FNDA, JKK, EWRS, VTWV, UVT, TWOK, FYC, SMLV, SJH, IESM, PXSC, VLU, PXSG
Feb. 3, 2014, 1:24 PM
- The Russell 2000's (IWM -3.3%) decline is nearly twice that of the S&P 500 and has the small-cap index now underperforming the big-cap gauge YTD (down 5.7% vs. 5.2%). It was little more than a week ago, the Russell 2000 was outperforming by about 300 basis points, and there have been numerous warnings (I, II) in recent weeks about an overvaluation in small-cap stocks that just couldn't last.
- Small-cap ETFs: IJS, IWM, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, TWM, SCHA, IWN, IWO, IJT, RWM, SRTY, DWAS, SAA, JKL, SLYG, VTWO, RZV, SLYV, SDD, JKJ, RSCO, SBB, RZG, VIOO, VTWG, UKK, FYX, TILT, VIOG, XSLV, FYT, VIOV, JKK, FNDA, EWRS, SKK, PXSV, UVT, TWOK, VTWV, SMLV, SJH, FYC, IESM, PXSC, VLU, PXSG
Jan. 27, 2014, 12:31 PM
- Once again, it's the Russell 2000 (IWM -1.9%) leading the way as the averages tumble. Green for the year just a few sessions ago, the small cap index is now off 3.6%, though it still hasn't caught up with the Dow's (DIA -0.5%) 4.7% YTD drop.
- Earlier: Small cap biotechs torched.
- Small cap ETFs: IJS, IWM, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, TWM, SCHA, IWN, IWO, IJT, RWM, SRTY, DWAS, SAA, JKL, VTWO, SLYG, RZV, SLYV, SDD, JKJ, SBB, RSCO, RZG, VIOO, VTWG, UKK, FYX, TILT, VIOG, XSLV, VIOV, FYT, FNDA, JKK, EWRS, SKK, PXSV, UVT, TWOK, VTWV, SMLV, FYC, SJH, IESM, PXSC, VLU, PXSG
- Apple's higher ahead of earnings this evening, but the broader tech sector (QQQ -1.5%) is also taking a big hit. Excepting Apple, all of the top holdings of the Nasdaq 100 - Google, Microsoft, Amazon, Qualcomm, Gilead, Intel, Cisco, Comcast, and Facebook - are lower.
- Broad tech ETFs: XLK, VGT, TECL, IYW, ROM, TDIV, TECS, IGM, RYT, QTEC, PSCT, FTEC, FXL, REW, MTK, PTF
Jan. 24, 2014, 2:29 PM
- "Investors should prepare for a bout of significant Russell 2000 underperformance," presciently wrote Michael O'Rourke of Jones Trading last night, noting how unusual it was to see the DJIA off 2.3% YTD, but the Russell up 1%. Look for that performance gap to close, he said.
- Closing it is today, with the small-cap index off 2.5%, about 1% worse than the Dow, S&P 500, and Nasdaq. The iShares Russell 2000 Index ETF (IWM) -2.7%.
- Small-cap ETFs: IJS, IWM, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, TWM, SCHA, IWN, IWO, IJT, RWM, SRTY, DWAS, SAA, JKL, VTWO, SLYG, RZV, SLYV, SDD, JKJ, SBB, RSCO, VIOO, RZG, VTWG, FYX, UKK, TILT, VIOG, XSLV, VIOV, FYT, FNDA, JKK, EWRS, SKK, UVT, PXSV, TWOK, VTWV, SMLV, FYC, SJH, IESM, PXSC, VLU, PXSG
Dec. 9, 2013, 12:00 PM
- December is the new January as far as small caps are concerned, with Arthur Hill pointing out it's actually the year's last month when small caps are most likely to outperform the market - they do it 74% of the time vs. 50% in January (and a range of 40-60% for the rest of the year).
- The Russell 2000 (IWM -0.2%) is off today as the S&P 500 (SPY +0.3%) rises, and thus far this month the S&P 500 - is ahead of the Russell by 140 basis points.
- Small cap ETFs: IJS, IWM, TZA, TNA, UWM, VB, IJR, SLY, EES, RWJ, VBR, VBK, URTY, TWM, IWN, SCHA, IWO, IJT, RWM, SRTY, SAA, JKL, DWAS, VTWO, SLYG, RZV, SLYV, SBB, SDD, JKJ, RSCO, RZG, TILT, UKK, XSLV, FYX, VTWG, VIOO, JKK, SKK, FYT, VIOG, EWRS, UVT, VIOV, PXSV, TWOK, VTWV, SMLV, SJH, FNDA, FYC, IESM, VLU, PXSG, PXSC
Oct. 17, 2013, 4:28 PM
- "We start to get a little queasy when we hit 19x," says BAML's Steven DeSanctis, unable to find bargains in any sector of the small cap universe.
- The Russell 2000 is up 29% this year, and 5.4% over the three months, easily cruising past the S&P 500's 21% and 2.7% gains, but the small cap's P/E ratio has risen to just over 18 vs. a long-term average of 14.9.
- The lofty valuation has BAML recommending clients swap out of U.S. growth for global growth as small caps generally have less exposure to international action.
- Small cap ETFs: IWM, VTWO, EWRS, SRTY, TWM, RWM, TNA, URTY, UWM, TZA, SMLV, TWOK, IWO, VTWG, UKK, SKK, IWN, VTWV, UVT, SJH.
Sep. 29, 2013, 9:13 PM
- Particularly apt reading tonight as stocks head south on worry about a partial U.S. government shutdown, The Brooklyn Investor makes the case for trying to ignore whatever the latest macro-boogeyman happens to be, and instead focus on buying and holding reasonably valued stocks. Paraphrasing Seth Klarman: "You just have to figure out what a business can earn in five or ten years on a normalized basis and see what it's worth; if you can buy it for lower than that, then it doesn't matter what the headlines say."
- The Shiller cyclically adjusted P/E ratio does raise TBI's eyebrow as it shows the market to be 47% overvalued, but it was similarly so in 1966. While the averages did nothing over the next 16 years, the "Superinvestors of Graham and Doddsville" (Walter Schloss, Tweedy Brown, Sequoia Fund) racked up ridiculous returns (this, of course, may be of little comfort to index investors).
- Buffett's classic "Superinvestors" article from 1984.
- Can the market go down? A lot? No doubt, says TBI, but the odds against being able to exploit a bear market are far too long - better to spend time looking for stocks trading at 1.1x book that should be selling for 1.5x book.
- Index value ETFs: SPYV, IVE, RPV, VOOV, FTA, SPYV, IVE, RPV, VOOV, FTA, IWN, VTWV, UVT, SJH, IWW, MDYV, IJJ, RFV, IVOV, SLYV, IJS, RZV, VIOV.
Sep. 2, 2013, 6:29 PM
- What George Soros' The Alchemy of Finance was to global macro investors, Michael Burry's journal of trades in 2000/2001 may be to value fans. "My strategy isn't very complex. I try to buy shares of unpopular companies when they look like road kill, and sell them when they've been polished up a bit ... I care little about the level of the general market and put few restrictions on potential investments."
- Plucked out of message-board obscurity and staked by Joel Greenblatt, Burry posted returns at his Scion Capital hedge fund of 8.2% in 2000 (partial year), 44.7% in 2001, and 13.1% in 2002, as the S&P lost 7.5%, 11.9%, and 22.1% during the same periods. When the S&P bounced 28.7% in 2003, Scion gained 50.7%.
- This journal shows Burry willing to venture into just about any industry or situation as long as he sees value there. One place he definitely didn't spot value was in the previously-favored big cap tech names as their stock prices imploded. "Now that the bubble is pricked, tech stocks will face scrutiny they never faced before. It is a good time to start picking prices based on a solid understanding of the fundamentals ... greater bargains are sure to come."
- Burry went on make an even bigger fortune for himself and his investors by shorting MBS from 2005 on (though his investors, including Greenblatt, never forgave him for straying from stockpicking).
- Value ETFs: SPYV, IVE, RPV, VOOV, FTA, IWD, VONV, UVG, SJF, IWN, VTWV, UVT, SJH, IWW, MDYV, IJJ, RFV, IVOV, SLYV, IJS, RZV, VIOV.
Jul. 9, 2013, 3:11 PM
State Street (STT) is competing aggressively on price with the launch of its Russell 2000 ETF (TWOK) - the fund will have an expense ratio of 0.12% vs. iShares' (BLK) IWM with expenses of 0.24%, and Vanguard's VTWO at 0.21%. In addition, SSgA is relaunching 3 existing ETFs after refitting them to Russell indexes. The SPDR Russell 3000 ETF (THRK) replaces the SPDR Dow Jones Total Market ETF (TMW), with expense ratio halved to 0.10%. The SPDR Russell 1000 ETF (ONEK) replaces the SPDR Dow Jones Large Cap ETF (ELR), with expense ratio halved to 0.10%. The SPDR Russell Small Cap Completeness ETF (RSCO) replaces the SPDR Dow Jones Mid Cap ETF (EMM) with expense ratio falling to 0.10% from 0.25%.| Jul. 9, 2013, 3:11 PM
Jul. 8, 2013, 3:54 PM
State Street (STT) looks to take on iShares' (BLK) dominant small cap ETF (IWM) with the Tuesday launch of the SPDR Russell 2000 ETF (TWOK). IWM currently has $23.3B in AUM and an expense ratio of 0.24%. This compares to other far smaller competitors like Schwab's SCHA at 0.08% and Vanguard's VB at 0.10%. Previous: Small cap stocks outpace the S&P 500. Other reasonably popular ETFs: IJS, IJR.| Jul. 8, 2013, 3:54 PM | 4 Comments
Jun. 4, 2013, 10:51 AMBNP's "Love-Panic Index" signals a correction ahead as it crossed into "love" territory a few weeks back. Past experience says to brace for an average 12% decline in the S&P (SPY) over the next 6 months. The biggest drivers of the recent move into "love" have been State Street's Investor Confidence, the CFTC's COT report, falling short interest, rising Nasdaq to NYSE trading volume, and small caps (IWM) outperformance over large caps (IWB). | Jun. 4, 2013, 10:51 AM | 14 Comments
May 20, 2013, 3:11 PM
The Russell 2000 (IWM) cracked 1,000 for the first time this morning, but the small cap sector is far from over-loved by the fund managers who invest in it, according to Credit Suisse's Lori Calvasina - they ended Q1 with cash holdings at a near 10-year high. Indexing (IJR, IWO, IWN XSLV are some others) beats most active management, but Calvasina screened for stocks owned by fewer than 50 small-cap funds with $500M-$1.5B market cap, and with favorable investment ratings. No surprise the answer is heavy on mREITs - MTGE, AMTG, PMT. Also coming up: OMX and WFR.| May 20, 2013, 3:11 PM
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