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(B)(N) The Russell 2000 & The Small Cap Renaissance

February 23, 2017
figure-1-im-late

Figure 1: You’re Late, You’re Late, Very Late!

Drama. Wall Street is saying that the time is ripe for a “Small Cap Renaissance” in America but they’ve only come-up with some well-worn ETFs in the Russell 2000 below the top-heavy Russell 3000 which helps BlackRock and Vanguard and a few others to make more money but it leaves the rest of us mostly poor and gaping at the “black box” that they call “investing” for 8% per year, maybe (TheStreet, February 1, 2017, Charts Say: Go Long the Russell 2000 in February as Small-Caps Set to Shine).

Well, we don’t want that in the “New America” and they’re already late because this Renaissance began more than a year ago and it appears to be approaching some kind of apogee and then the “rabbit hole” that’s typical of the Wall Street endorsements; please see Figure 1 on the right above.

And we believe that if the government wants something, we should give it to them and so we’re buying more small caps and growth companies all across the country (and not just on Wall Street) which are providing real products in the mortgage, labor, crime, infrastructure, and health services and food industries, for example, that Uncle Sam, who is a going concern, needs and this market is huge in real stocks with personalized play dates made just for us and it’s also good to be there early in case the activists come.

And we’ve back-tested this portfolio and we’re good to go (please see below) but we need to apologize for these results because +40% per year with no risk at all is really over the top and we’re more comfortable with only 20% or 30% per year from these investors who might end-up with nothing at all; please see Figure 2 below for what it’s going to cost you today in the apogee market before the rabbit-hole which we will easily avoid in the (B)-class portfolio.

figure-2-10

Figure 2: Always leave 10% for the others – Meyer Amschel Rothschild circa 1790

But we can’t tame our results without breaking our own rules – we want 100% capital safety and 100% liquidity, guaranteed, and we want a hopeful but not necessarily guaranteed return above the rate of inflation.

Sorry for all that but it doesn’t seem like too much to ask – if the market were rational, all trades would be made only at the risk price which is the “clearing price” in a rational market – and, after all, we’re helping to Make America Great Again by re-cycling their lost money and the Fed is not going to make any more of it until we do.

The Russell 2000 & The Small Cap Renaissance

exhibit-1-bn-american-renaissance

tgx-ayi-acuity-brands-incorporated

Figure 1.1: AYI Acuity Brands Incorporated (B+)

tgx-alb-albemarle-corporation

Figure 1.2: ALB Albemarle Corporation (B+)

tgx-awk-american-water-works-company-incorporated

Figure 1.3: AWK American Water Works Company Incorporated (B+)

tgx-bery-berry-plastics-group-incorporated

Figure 1.4: BERY Berry Plastics Group Incorporated (B+)

tgx-cxw-corecivic-incorporated

Figure 1.5: CXW CoreCivic Incorporated (B+)

tgx-elli-ellie-mae-incorporated

Figure 1.6: ELLI Ellie Mae Incorporated (B+)

tgx-fn-fabrinet

Figure 1.7: FN Fabrinet (B+)

tgx-agm-federal-agricultural-mortgage-corporation-class-c

Figure 1.8: AGM Federal Agricultural Mortgage Corporation (B+)

tgx-fls-flowserve-corporation

Figure 1.9: FLS Flowserve Corporation (B+)

tgx-fmc-fmc-corporation

Figure 1.10: FMC FMC Corporation (B+)

tgx-rock-gibraltar-industries-incorporated

Figure 1.11: ROCK Gibraltar Industries  Incorporated (B+)

tgx-hi-hillenbrand-incorporated

Figure 1.12: HI Hillenbrand Incorporated (B+)

tgx-iex-iex-idex-corporation

Figure 1.13: IEX IDEX Corporation (B+)

tgx-isil-intersil-corporation

Figure 1.14: ISIL Intersil Corporation (B+)

tgx-jbt-john-bean-technologies-corporation

Figure 1.15: JBT John Bean Technologies Corporation (B+)

tgx-ldl-lydall-incorporated

Figure 1.16: LDL Lydall Incorporated (B+)

tgx-mas-masco-corporation

Figure 1.17: MAS Masco Corporation (B+)

tgx-door-masonite-international-corporation

Figure 1.18: DOOR Masonite International Corporation (B+)

tgx-msex-middlesex-water-company

Figure 1.19: MSEX Middlesex Water Company (B-)

tgx-mwa-mueller-water-products-incorporated

Figure 1.20: MWA Mueller Water Products Incorporated (B+)

tgx-oc-owens-corning-incorporated

Figure 1.21: OC Owens-Corning Incorporated (B+)

tgx-ravn-raven-industries-incorporated

Figure 1.22: RAVN Raven Industries Incorporated (B+)

tgx-smtc-semtech-corporation

Figure 1.23: SMTC Semtech Corporation (B+)

tgx-supn-supernus-pharmaceuticals-incorporated

Figure 1.24: SUPN Supernus Pharmaceuticals Incorporated (B+)

tgx-syy-sysco-corporation

Figure 1.25: SYY Sysco Corporation (B+)

tgx-geo-the-geo-group-incorporated

Figure 1.26: GEO The GEO Group Incorporated (B+)

tgx-midd-the-middleby-corporation

Figure 1.27: MIDD The Middleby Corporation (B+)

tgx-tbi-trueblue-incorporated

Figure 1.28: TBI TrueBlue Incorporated (B+)

tgx-wat-waters-corporation

Figure 1.29: WAT Waters Corporation (B+)

tgx-xon-intrexon-corporation

Figure 1.30: XON Intrexon Corporation (N)-class

For more examples of the (B)-class portfolio in difficult markets, please see our recent Posts on”The “W” Syndrome“, Steel,  Green Energy, UFOs and the High Flying Techs, and The Coal War which is heating-up again now; and the Canadian Mines have also taken-off – please see our recent Post “(B)(N) Extreme Economics – The (New) Canadian Mines” for a heads-up on that as well as The Great Rotation & Twenty Hot Canadians 2017.

And for more information and examples of the Free Market Yield and the terms that we have used above, please see our Posts “(P&I) The Dismal Equation (Ecclesiastes 9:1)” and “(B)(N) S&P 100 Volatility Risk and The Full Moon” and “(B)(N) NASDAQ 100 Volatility and The Stone Bunnies“ and for an introduction to The Barometer “(B)(N) What’s A Girl To Do” or “(P&I) The Swiss Franc Debacle“.

And for more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”). The Canada Pension Bond®™, The Medina Bond®™, The Barometer®™, the Free Market Yield®™ and Extreme Economics®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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