Major stock indices are back in the red for the year, erasing what at one point just a few weeks ago were sizeable gains.
The small-cap Russell 2000, once the leader of the major indexes this year, has led in the most recent decline.
Barron’s and other publications that touted the safe-haven status of small-caps amid growing tariffs and trade wars have now begun to question their outlook moving forward.
What should a small-cap investor do?
First, don’t panic.
The bullish momentum in the broader global equity markets leading into this year was strong enough that the near-term outlook is more likely a trading range than an impending bear market.
More importantly, as a small-cap investor, while the Russell 2000 may play a role in your asset allocation for your less risky growth assets, the real money is made in finding undervalued and underfollowed stocks poised to catch Wall Street’s interest.
The Russell 2000 will never return triple digits in a year, but by finding the right small-caps, and building your own diversified basket of six to even 10 small-cap stocks, you could not only significantly outperform the index, but you could also positively hedge your larger holdings.
As an example, right here from the RedChip Nation, when the broader markets fell sharply two weeks ago, we had multiple stocks that posted double-digit gains for the week.
Marker Therapeutics (NASDAQ: MRKR) was up 22% that week. MamaMancini’s Holdings (OTCQB: MMMB) was up 18%. And SuperCom (NASDAQ: SPCB) was up nearly 11%, just to name a few.
Last week, as the markets closed even lower, RedChip Nation stocks again bucked the broader trends, including 1347 Property (NASDAQ: PIH) up 10% and Craft Brew Alliance (NASDAQ: BREW) up 8%.
So the best course of action for most would be to dollar-cost average into your index ETFs while the market is down for your lower risk money, and for your higher risk allocations, continue to search for exciting small caps with big potential, led by strong management teams, that haven’t quite reached Wall Street’s radar screen yet.
And of course, reading the RedChip Money Report and watching our exclusive CEO interviews are great ways to stay abreast of the latest developments on what could become future homeruns in the small-cap space.
