Tag Archives: Russell 2000

M&A (merger and acquisition)

As I wrote about earlier, you must look for small cap stocks in the Russell 2000 now. It is risky, but high risk means high gain, and you have to spend money you can afford to lose. So why small cap stocks?

You see, America is for sale and that is for the highest bidder. What I am talking about is really good companies out there. The companies that no one is talking about. The cheap one. The innovative one.

There is a lot of money out there waiting for good investments. Many of the great companies are searching for the right small cap stocks. Why? They simply want to thrive by purchasing growth.

Take a look at Google. For example, they expanded and bought Youtube.com. Everyone is afraid of Google. They are a great example of a model for what a media company needs to be in order to be competitive in the future.

Cisco was smart enough to buy companies with great talents instead of developing them themselves. Cisco have done this over 140 times since 1993. They are infusing new ideas and new ways of thinking by doing it like this. It makes them strong and competitive. Google seems to do exactly the same thing and that makes them stay ahead of a rapidly changing competitive landscape on internet.

The really biggest day in e-commerce in history is Cyber Monday. $10 billion was spent from about 70 million online shoppers. That`s an increase of 18%. 30% of the purchases came from a mobile device. 80% of those came from an Iphone or iPad. unbelievable!

And here is the catch: Social sites generated only around 1% of the e-commerce sales on that day. An increase of only 2%. So, E-commerce is the real big thing. It`s business. 17% of the sales came from Email. That`s pretty nice.

Facebook, Twitter, Instagram and Pinterest are popular sites and people still think that social media is a marketing must. The numbers are falling and the money is not in here. Social media is better for branding, networking and community building, but direct sales is better other ways than social media. Will we see any M&A in this sector in 2014? Are those big ones looking for small caps?

This is a tremendous investment opportunity and you as an aggressive investor need to play on it. But how? I expect next year to be a takeover boom! You have probably seen it before and know that nothing jolts a stock higher than an unsolicited takeover offer. The stock prices skyrocket on rumors like that.

Who say no to a single-day return of 50% or more? I have many new and exciting companies on the radar, but I can`t tell you what stocks it is. It is a lot of research behind the work of finding the best stocks, so this is what I get paid for.

But I can tell what sectors you should look for. It is technology and healthcare. I expect a lot of action in those sectors next year. I really look forward to 2014. It`s gonna be a funny year. So, I am still bullish!

News today: PPI m/m at 8.30am.

mergers-acquisitions-2-300x286

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Advertisements

Leave a comment

Filed under Stock market, Stocks

Russell 2000 vs S&P 500

Japan`s Nikkei fell on friday, dragged down by Sony Corp, Nitto Denko Corp (Apple Inc supplier) and NTT Data Corp. All of them lowered their earnings guidance. Sony had a huge drop last week. European shares rise on hopes of dovish signals from ECB.

The ECB is expected to set a more dovish tone at its policy meeting on Thursday. Many people are scared because we are at an all time high and wonder where to go now. Credit Suisse said it believed equity markets would be significantly higher in 6 and 12 months’ time.

Gold are trading at $1316,70, and it is still above the support at $1300. This presious metal seems to go sideways for a while now. VIX is still low and stock market also seems to trade sideways, but I will take a closer look at it this week.

Janet Yellen wants the FED to work strenuously (like outgoing chair Ben Bernanke) to buy up bonds. She want the money to float into the private market and to increase theoretically available credit. In other words: she wants the money to be “loose”.

So far, this strategy have never been solving any recession problems. I don`t think FED have even one example in the the FED`s 100 year of history where loose money has borne along an economic recovery. She stands for something that have never worked.

The small cap stocks is the sweet spot I am talking about today. The best measure of small caps is the Russell 2000, and it has outperformed the S&P 500 by 2 to 1 over the last three months.

The Russell 2000 is up an incredible 27% over the last 10 months, while the S&P 500 is up “only” 19%. Is the small cap ride over now? Not by a long shot. And remember: 40 small cap stocks will rise 100% today! Take a look at the chart below. I have typed in the Russell 2000 compared to S&P 500.

RUT and SPX

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Leave a comment

Filed under Stock market

Explosive growth

The Russell-2000 is the best measure of small caps and has the last two months outperformed the S&P 500 by 2-1. The last 10 months has been amazing for Russell 2000 which is up 37%. That is 12% better than S&P 500 which is up (only) 25%.

Small cap stocks have outperformed large cap stocks in seven of the past ten years by 40 percent. The earnings for the small-cap stocks rose by 9% (Russell 2000). S&P rose only 5% over the last twelve months.

When bond yield are rising, the history tells us that the small-cap stocks are outperforming. We saw Microsoft buying Nokia for $7 billion, but those two are blue chips stocks. Microsoft is not explosive enough. Small-cap stocks are, and they are in a great position for takeovers.

When the rumors for takeovers are in the market, the small-cap stocks prices are going wild. Now, it is a good time for many small-cap stocks to sell. It seems to be a good invironment now. Money is cheap now, but everyone know that the interest rate are rising, which means it will be more expensive to buy a company next year.

Many companies have been cautious with their money during the recesssion. They now have a stockpile of $2 trillion! That`s enough money pay some of the federal deficit in a few seconds. They can use the money to buybacks, dividende or M&A.

The thing is that companies want to grow, and that is fast. In addition; investors want to see the stockprice go up to heaven. But, it`s difficult to grow organically. That`s why Google bought Youtube. That`s why Facebook bought Instagram. They have both been growing, and the investors doesn`t cry over this kind of strategy.

Don`t forget the private equity firms that have hoarding cash now. They have about $1 billion in cash. They must spend $200 million the next months because that`s the rules. If they don`t do that, they must pay the money back to the investors. As you know; they will buy small-cap stocks.

I am looking for companies with strong financials. I am looking for companies that have a huge growth potential and I am looking for companies that is innovative, because that is attractive to the people looking for a takeover.

S&P 500 and the Dow rose yesterday as Republicans and Democrats in Congress showed early signs of a possible break in the impasse. The shutdown is in it`s ninth day, and President Obama invited lawmakers from both parties to the white house to discuss the government shutdown and raising the debt limit.

The VIX rose to 19,60 yesterday. A level above 20 is normally associated with investors anxiety and concern about the near-term direction of the market. Today I will look for these news: Unemployment Claims at 8:30am, 30 Year Bond Auction 1;01pm.

The volume was light on NYSE yesterday. 5,9 billion shares was changing hands. I will sit on my hands now until october 17. Just wait and see what`s happening. Russell 2000 was down 0,36% yesterday. Every time Russell 2000 breaks the 50 MA it rebounds. Will that happen again? Remember that we are at the all time high too. Take a look at the chart below:

RUT

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Leave a comment

Filed under Stocks