Since the October 2014 lows, the Russell 2000 (the broadest measure of the small-cap sector) has gained 18.09%.
To put it mildly, small-caps have absolutely been crushing the broader market over the last four-and-a-half months. Too bad the mainstream financial media would rather spook investors with the "what-ifs" of what is going wrong domestically and abroad.
Speaking of media coverage…
Remember back in September 2014 when the Internet and every major financial network was stumbling all over themselves to spell the end for small-caps because the Russell 2000 had just experienced the dreaded "Death Cross," a technical condition that occurs when the 50-day simple moving average crosses below the 200-day simple moving average?
I wrote an article at that time dissecting the truth behind the small-cap Death Cross.
And the verdict?
A whole bunch of hooey!
Investors who "short" the Russell 2000 during a Death Cross condition experience a dismal 25% winning percentage and an average return of a 0.97% loss.
Bottom line, the Death Cross is statistical a waste of time. It makes for good headlines – and a good way to lose money.
Another Cross Signals Profits
On the other hand, the "Golden Cross" (when the 50-day moving average crosses above the 200-day moving average) actually provides a much more valuable signal.
Investors who "go long" the Russell 2000 during a Golden Cross condition experience an impressive 78.13% winning percentage with an average return of 17.01%.
If you want to dig into those numbers a bit more here's the original article again.
Why am I running on about the Golden Cross? Because the Russell 2000 unceremoniously experienced a Golden Cross back on December 19, 2014 . You probably never heard a single peep about it from the same financial pundits who would rather spook you into reading when the Death Cross occurred.
Since then, the Russell 2000 has hit all-time highs and investors who've been invested in quality small-caps stocks are experiencing some very good returns.
Could we see a pullback (off all-time highs) in the near term?
Recommendations for Small-Caps
Sure, pullbacks are always a possibility.
Longer term, though, quality small-cap companies still represent one of the strongest wealth creation investments in the market – but not just any small-cap company.
It's important to make sure you're investing with global must-have trends that provide strong tail wind. My favorite sectors right now are biotech, cybersecurity, all-flash memory storage, artificial intelligence, and Chinese consumers – all of which either meet a critical demand for the future or are the future.
Already this year, subscribers in my Small-Cap Rocket Alert have pocketed gains of 200% on two separate occasions following two explosive biotech companies.
And things are just heating up.
Last week alone we experienced single-day gains of 27.4% and 9.4% on two non-biotech companies with disruptive technologies of their own that are re-writing how their respective industries operate.
About the Author
Sid is the investment community's best-kept secret. Since 2009, he's served at Money Map Press as Director of Research, analyzing thousands of securities and profit opportunities for subscribers. He's an expert in identifying "alpha" potential in a wide variety of industries, but especially the small-cap sector, where he's discovered a pattern of profits that's almost foolproof.