{"id":111493,"date":"2021-04-07T17:27:23","date_gmt":"2021-04-07T17:27:23","guid":{"rendered":"https:\/\/fin2me.com\/?p=111493"},"modified":"2021-04-07T17:27:23","modified_gmt":"2021-04-07T17:27:23","slug":"gamestop-investor-on-why-hes-still-holding-on","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/gamestop-investor-on-why-hes-still-holding-on\/","title":{"rendered":"GameStop investor on why he&#39;s still holding on"},"content":{"rendered":"<p><cite>New York (CNN Business)<\/cite>The stock market is firmly back in bull mode. The S&amp;P 500 is above 4,000 and near a record high, and the Dow is close to an all-time peak, too. But investors should keep smaller American companies in mind, even as they keep throwing money at blue chips like Caterpillar, Chevron and GM. <\/p>\n<p>The <span>Russell 2000<\/span> <span>(<span>RUT<\/span>)<\/span>, an index that&#8217;s home to many small cap US stocks, is up about 13% so far in 2021. That&#8217;s better than the gains for the Dow, S&amp;P 500 and the Mega Tech-dominated Nasdaq, which are up between 6% and 9% this year.<br \/>\nSmaller stocks began to rally at the end of 2020 after getting hit hard during the onset of the Covid-19 pandemic in the United States a year ago and they&#8217;ve continued to surge ever<strong> <\/strong>since.<\/p>\n<ul><\/ul>\n<p>&#8220;The Russell 2000 has had its best back-to-back quarterly gains in history,&#8221; said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, in a recent report.  <\/p>\n<ul><\/ul>\n<h3>Stronger dollar and rebounding economy helps small stocks<\/h3>\n<p>There are plenty of good reasons behind the small business surge. Stimulus checks are lifting consumer spending and the domestic economy &#8212; and many Russell 2000 companies have a bigger chunk of their sales coming from the United States than from international markets.<br \/>\n&#8220;Even after a rotation towards value and small cap stocks in recent months, relative to history they still look cheap compared to large-cap growth stocks and should benefit from a very strong economic surge,&#8221; said David Kelly, chief global strategist with JPMorgan Funds, in a report.<br \/>\nSmaller companies are also getting a currency boost. The US Dollar Index, which measures the greenback versus a basket of other global currencies, is up about 3% in 2021 and near its highest levels of 2021. (The index is still significantly below its all-time high from 1985, though.)<br \/>\nIf the dollar continues to gain momentum, that should be great news for domestic consumer companies &#8212; and not so great for top multinationals &#8212; because a stronger dollar hurts the value of sales and profits generated overseas.<br \/>\n<img decoding=\"async\" alt=\"Fed up with FAANG and meme stocks? Here&amp;#39;s a new investing strategy\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210323101259-nyse-0922-restricted-large-169.jpg\"><br \/>\nInvestors in smaller companies are also flocking more to value-oriented sectors such as banks, energy and consumer firms, as opposed to growth sectors like tech and biotech &#8212; a trend that&#8217;s taking place with larger stocks as well.<br \/>\nThe <span>iShares Russell 2000 Value<\/span> <span>(<span>IWN<\/span>)<\/span> and <span>Vanguard Russell 2000 Value Index Fund<\/span> <span>(<span>VTWV<\/span>)<\/span> ETFs are each up nearly 23% this year while their <span>growth counterparts<\/span> <span>(<span>IWO<\/span>)<\/span> are up less than 7%. (That&#8217;s still a respectable gain for the <span>smaller growth stocks<\/span> <span>(<span>VTWG<\/span>)<\/span> however.) <\/p>\n<h3>Investor risk appetite is growing<\/h3>\n<p>The rally in small caps comes as many individual investors are gravitating toward riskier (and in some cases, unprofitable) smaller companies.<br \/>\nThe Reddit-Robinhood crowd has fallen head over heels for &#8220;meme stocks&#8221; like <span>GameStop<\/span> <span>(<span>GME<\/span>)<\/span>. And, surprisingly, the video game retailer is still in the Russell 2000 &#8212; even though it now has a market value of nearly $13 billion &#8212; more than three times the average market cap of $3.8 billion for companies in the index.<br \/>\n<img decoding=\"async\" alt=\"Here&amp;#39;s why Cathie Wood and Kevin O&amp;#39;Leary are still bullish on growth stocks\" class=\"media__image\" src=\"\/\/cdn.cnn.com\/cnnnext\/dam\/assets\/210325113901-cathie-wood-kevin-oleary-jan-van-eck-restricted-large-169.jpg\"><br \/>\nSo investors should be prepared for more swings in the Russell 2000.<br \/>\n&#8220;Even before the &#8216;Reddit revolution&#8217; emerged, active investors have long been drawn toward the realm of small-cap stocks,&#8221; said Lule Demmissie, president of Ally Invest, in a recent report.<br \/>\nSmaller companies usually beget increased volatility. &#8220;These stocks are prone to go up more in good times, but that can be a double-edged sword in bad times,&#8221; Demmissie added.<\/p>\n<ul><\/ul>\n<p>She noted that the Russell 2000 has a mix of companies vying to become the next <span>Apple<\/span> <span>(<span>AAPL<\/span>)<\/span> or <span>Tesla<\/span> <span>(<span>TSLA<\/span>)<\/span>, turnaround stories like GameStop and speculative bets where investors are swinging for the fences.<br \/>\nSome of those companies have already moved on to the next level, with two of the largest weightings in the Russell 2000, casino companies <span>Penn National Gaming<\/span> <span>(<span>PENN<\/span>)<\/span> and <span>Caesars Entertainment<\/span> <span>(<span>CZR<\/span>)<\/span>, graduating to the S&amp;P 500 last month.<br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2021\/04\/07\/investing\/small-cap-stocks\/index.html\" target=\"_blank\" rel=\"noopener noreferrer\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New York (CNN Business)The stock market is firmly back in bull mode. The S&amp;P 500 is above 4,000 and near a record high, and the [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":111492,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>GameStop investor on why he&#039;s still holding on - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/gamestop-investor-on-why-hes-still-holding-on\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"GameStop investor on why he&#039;s still holding on - Fin2me\" \/>\n<meta property=\"og:description\" content=\"New York (CNN Business)The stock market is firmly back in bull mode. 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