Where to Find Stock Outperformance the Rest of 2019?

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – The rapid gains year to date are not built to last. So where should investors look for outperformance?.

I’m getting tired of the US-China trade circus. That’s because the US has already won and it’s in China’s best interest to not drag out any further.

The proof of victory is best understood by appreciating that the US economy has put up another +3.2% GDP quarter while China continues to weaken. I am not talking about the 100% fabricated GDP growth rate reported by the un-elected Chinese government. I mean the proof of slowing in all the independent sources of data like international corporations noting significant weakness in China.

Reity, if this is all so obvious, then why is the market dropping at this time?

The S&P rallied over 25% from the Christmas Eve low to the highs of last week. So investors were happy to find a convenient excuse to take some profits off the table.

Or to put it another way, this is the pause that refreshes before the next leg higher. This brings us around to the main topic today…

Where to Find Outperformance the Rest of the Year

So yes, we will make higher highs this year. And yes, it will be above 3,000. But do not expect any repeat of the torrid gains so far in 2019. Instead we will slow down to a more typical 5-10% a year pace.

If that is fine by you, then just please put all your money in SPY and call it a day. For those hoping for a chance at outperformance I think you need to appreciate this chart below.

What it shows you is that since making highs at the end of August 2018 the S&P is basically flat while mid caps are down -5.5% from their peak and small caps an even greater laggard at -9.4%.

So a lot of ink has been spilled talking up the excitement of the S&P 500 making new highs last week. However, as we go beyond the headline stocks we see there is actually a lot more room for these smaller stocks to regain their lost luster.

That current deficit from the highs should become solid outperformance as the year progresses. Thus, I highly recommend that you overweight small caps going forward. Ditto for many attractive mid caps you will find trading well off their 52 week highs.

What to do Next?

Not only do small caps look the best right now, but they also enjoy a considerable long term performance advantage over large caps. In fact, over the last 30 years large caps have rallied +9,035%.

That sounds pretty good until you appreciate the vastly better +12,241% return for small caps. This long term edge had me on the verge of making a focus on small cap stocks lesson #10 from my recent webinar. Instead I left it at just 9 lessons learned over my 40 year investment career.

To help you track down more attractive small cap stocks, please consider these resources:

Best Performing Small Cap Stocks May 10, 2019

Stock Screener (just adjust market cap filter)

Small Cap Blend ETFs

Small Cap Value ETFs

Small Cap Growth ETFs

Wishing you a world of investment success!

Steve Reitmeister

…but my friends call me Reity (pronounced “Righty”)
CEO, Stock News Network

To see Steve Reitmeister use his 40 years of investment experience to hand select the best POWR Ratings stocks, then check out the Reitmeister Total Return portfolio.

shares . Year-to-date, has gained 15.78%, versus a % rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of StockNews.com.

Most Popular Stories on StockNews.com

These 5 Economic Reports Hold the Key for Stocks

Thanks to signs of easing inflation in May we have enjoyed a rally for stocks with the S&P 500 (SPY) making new all time highs. What happens next for stocks very much is tied to the results for these 5 upcoming economic reports. Steve Reitmeister previews these announcements with keys to what stocks do next. Read it all in the full article below...

NVIDIA (NVDA) Earnings Are Out: Here's What to Do

NVIDIA’s (NVDA) much-anticipated first-quarter earnings report comfortably surpassed analyst expectations, driven by massive demand for its AI chips. The chipmaker also announced a 10-to-1 stock split. Following an impressive financial performance, how should investors approach this stock? Read on to know more...

3 Gold Stocks With May Upside Potential

Gold’s prospects appear promising owing to rising disposable incomes, its appeal as a safe-haven asset, and the expected interest rate cuts later this year. Amid this backdrop, investors could consider buying quality gold stocks Eldorado Gold (EGO), Alamos Gold (AGI), and Centerra Gold (CGAU), given their strong upside potential. Read on...

3 Tech Stocks for Bullish Investors This Week

The technology industry is growing rapidly owing to the rapid adoption of emerging technologies and increased enterprise spending on digitization. Amid this backdrop, it could be wise to invest in quality tech stocks Ericsson (ERIC), Pure Storage (PSTG), and Proto Labs (PRLB) this week for substantial gains. Continue reading...

Stock Investors: Fade This Rally

Nice rally...but is it really built to last? That is what we have to ask ourselves as the S&P 500 (SPY) nears the all time highs. 44 year investment veteran Steve Reitmeister shares his updated market outlook which includes why there is likely not much more upside in the days in the head. Gladly, there are still ways to carve out profits from the market if you look in the right places. Just read on below for the full story...

Read More Stories

More SPDR S&P 500 ETF Trust (SPY) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SPY News