I already got out last week, thinking i may get back in later but with tariffs and continued rates hitting small caps it could stay down a while longer. Its been pretty flat since Feb of 2022 as it is.


Thoughts

jamey said:

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I already got out last week, thinking i may get back in later but with tariffs and continued rates hitting small caps it could stay down a while longer. Its been pretty flat since Feb of 2022 as it is.

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I know I have posted my ratio methodology before but go run a 5 yr weekly chart of SPY:IWM

SPY has been outperforming IWM in solid fashion since 2021. The ratio continues to make new high in favor of SPY and is trading above the 200/50/20 week averages.

I said this about a month ago and it still holds, I see nothing in this chart indicating an allocation shift toward IWM is warranted at this time.

I don't trade IWM much. It's been Mag 7 or nothing the last three years.

$30,000 Millionaire said:

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I don't trade IWM much. It's been Mag 7 or nothing the last three years.

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I'm sure that worked out very well! At some point I would think the other 493 benefit from AI in their earnings, not so much the early creators of AI.

Do you agree with that and if so when do you project that to happen?

Tormentos said:

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jamey said:

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I already got out last week, thinking i may get back in later but with tariffs and continued rates hitting small caps it could stay down a while longer. Its been pretty flat since Feb of 2022 as it is.

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I know I have posted my ratio methodology before but go run a 5 yr weekly chart of SPY:IWM

SPY has been outperforming IWM in solid fashion since 2021. The ratio continues to make new high in favor of SPY and is trading above the 200/50/20 week averages.

I said this about a month ago and it still holds, I see nothing in this chart indicating an allocation shift toward IWM is warranted at this time.

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Looks good. I was shooting for rates to continue down and for IWM to keep going up but thats been at a minimum paused for a while. I came out well into the green after buying IWM when rates started going up but I was planning on making more, with the Russell at 2800 or so

I don't think we understand the impact meaningfully of AI yet - to be honest.

Bumping this up, if you chart daily SPY:IWM ratio the ratio has finally broken a multi month trend line that was favouring SPY. May be worth a slight allocation shift over to IWM and continue to watch.

jamey said:

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$30,000 Millionaire said:

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I don't trade IWM much. It's been Mag 7 or nothing the last three years.

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I'm sure that worked out very well! At some point I would think the other 493 benefit from AI in their earnings, not so much the early creators of AI.

Do you agree with that and if so when do you project that to happen?

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This assumes that stocks are valued by active managers with discretion and knowledge toward where they allocate capital. Increasingly so, they're not. The Mag 7 have disproportionately benefited from passive investing that just pushes money to the high market cap gainers, then create a feedback loop that continues to concentrate capital in those very few companies.

Some of the 493 companies you mentioned and others listed elsewhere will get traction from AI but I don't think the index tracking fund will reflect it. For me if you're going to trade Russel, then you should identify 3-5 investing themes you're confident about and find specific companies that fit those themes and have fundamentals you're comfortable with.

$30,000 Millionaire said:

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I don't think we understand the impact meaningfully of AI yet - to be honest.

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I also don't think we have a clue yet of who the winners will be. Only some of the losers.

One could also buy the RDTE or IWMY Russell 2000 ETFs and enjoy weekly dividends of 20-30 cents/share.

I saw something recently stating the Russell doesn't compete woth the S&P at times like it use to because so many would be small caps go straight to large caps, and don't lift small caps index as a result

For example

*ANDURIL CEO PALMER LUCKEY: “WE ARE DEFINITELY GOING TO BE A PUBLICLY-TRADED COMPANY”

pic.twitter.com/0UySIv3kse

— Stock Talk (@stocktalkweekly) June 10, 2025