You Can Still Access Poised To Triple
As some of you might have noticed, the PoisedToTriple and PTTResearch websites have both gone dark. Before that happened, I sent emails to my partners (who hold control over these website / domains), and their attorney, to ensure that we maintained these sites for customers while resolving our long-ongoing internal dispute.
Unfortunately, something must have gone wrong because PoisedToTriple went dark shortly after I emailed them. I tried contacting them to find out what happened, but haven’t heard back yet. Luckily, they were smart enough to leave our staging sites live on the Internet. You can access them via these links (for now):
Now, if these sites also happen to go dark (for whatever mysterious reason), don’t worry. I have complete copies of the websites, along with these staging sites. I’ve also backed them all up in multiple locations. Thus, I will be able to work with my partners and attorney to re-establish access as soon as possible.
In any case, as you all know, I’ve been dutifully providing continuing coverage for free here while the internal dispute continues (and no, I don’t have any updates I can share at this time).
Hopefully, we can figure it out. So, if any of you are still friendly with my esteemed partners (Ian & Jeremi Karnell), please pass the word along. Also let them know that PTT Research doesn’t appear in their LinkedIn profiles for some reason. I wouldn’t want their employers / prospective employers to think they were hiding anything…
OK, on to more important business…
Why Is The Market Rally Leaving Small Caps Behind?
With President Trump’s desire to lower corporate taxes and America-first agenda, one would think that small caps would be benefiting the most. After all, smaller companies actually (and ironically) pay higher taxes. They are also more insulated from trade wars (because they don’t do as much business overseas) and better positioned to benefit from an increase in U.S. economic activity.
Despite this, the Russell 2000 is only up about 4% since I initiated my latest Yellow Alert (in late-November), versus something closer to 10% for the S&P 500.
It makes no sense until you realize two things:
1. New and existing mom-and-pop money is favoring stocks over bonds. Interest rates are rising and that puts pressure on bonds. Mom and pops don’t know which stocks to buy, so they just buy passive mutual funds or ETFs. S&P funds and SPY (an ETF) are arguably the most popular. The huge flow of funds has been concentrated there, regardless of valuation.
2. The pending capital gains tax changes are causing distortions in the market. At the end of each year, many investors sell their losers to offset gains on their winners. This year, with a capital gains tax cut anticipated, investors are holding on to their winners (so they can pay the lower rate later) and continuing to sell their losers (to offset any gains they might have booked).
As a result, stocks that have been falling over the last few quarters continue to fall while winning stocks are enjoying a period of insulation from selling pressure.
This should reverse when the tax changes become effective. This should come as no surprise. Here’s why…
Investors have been led to believe that the Ronald Reagan era instantly catalyzed a massive bull market. The facts show that this is not true. In fact, the market had a short-lived rally when Reagan was elected in November 1980 (just as it did for Donald Trump in 2016) and made new 52-week highs in March 1981 (just as it did for Donald Trump this year).
However, in 1981, once the capital gains tax initiative was introduced into Congress (which hasn’t happened yet in 2017), the market immediately launched into a tailspin, losing 22% percent before the end of September. The correction continued until August of the following year:
Just one more reason to be wary at the current levels. After this week’s weak action, we could certainly get a bounce here, but my risk/reward charts are still on alert… so, be careful.
Good News for RSYS & RDCM
Last week, TIA Now interviewed Brian Bronson, CEO of Radisys (NASDAQ:RSYS) There were some great data points here, suggesting that 1) RSYS has about 6 new potential customers and 2) that the market has started heating up over the past 6 months. This is great news for anyone in the space, including RSYS, RADCOM (NASDAQ:RDCM), and others.
It’s a great interview to watch. Enjoy.
On Monday, I sold Redknee (OTC:RKNEF) out of the 1% Portfolio. The company has failed in its long-running quest for market leadership and released its long-time CEO. I held the man in high regard, so I view this as a sign that nothing will get better there anytime soon. Win some, lose some. Thankfully, I suspect that very few of you were involved with this one.
I also covered Amplify Brands (NYSE:BETR) from the 1% Portfolio. The stock is very close to the bottom of its channel again. I see no reason to hold out for every last penny here. It’s been a great hedge for us. #ProfitableInsurance
If you don’t want to wait for my notifications to appear here, just keep an eye on the 1% Portfolio, which is freely available to access online. Cheers!
The information in this article is for informational and illustrative purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action. The opinions expressed in Pipeline Data, LLC publications are the opinions of Mr. Gomes as of the date of publication, and are subject to change without notice and may not be updated.
All investments carry the risk of loss and the investment strategies discussed by Mr. Gomes entail a high level of risk. Any person considering an investment should perform their own research and consult with an investment professional. Additional important disclosures can be found in the Important Disclosures section at PipelineDataLLC.com.