Why Investors Should Be Small-Minded

This equity class is likely to seriously outperform for the remainder of the year... [Shield] AN OXFORD CLUB PUBLICATION Loyal reader since April 2024 [Liberty Through Wealth]( [View in browser]( SPONSORED Alexander Green's Emergency State-of-the Market Summit On August 21 at 7 p.m. ET, Alex will reveal a bold prediction... an unusual Fed move could send one group of overlooked stocks soaring 3,000% - or more - over the next 12 months. Plus you'll discover the MAJOR market event that's only happened nine times in 30 years... and if Alex thinks we're about to see it happen again. [REGISTER HERE NOW.]( (Clicking the link above automatically registers you for the Alexander Green's Emergency State-of-the-Market Summit, a free subscription to Liberty Through Wealth, and offers from us and our affiliates that we think might interest you. You can unsubscribe at any time. [Privacy Policy.]( EDITOR'S NOTE On August 21, at 7 p.m. ET, Alexander Green is hosting an urgent online summit to reveal: - Why the Fed's next move could send Power Stocks soaring - His top 3 Power Stock picks for potential 1,000%+ gains in the next year - A LIVE Power Stock recommendation (ticker symbol included) Don't miss this rare chance to get ahead of Wall Street. To reserve your free spot at Alexander Green's Emergency State-of-the-Market Summit, [simply click HERE](. (Clicking the link above automatically registers you for Alexander Green's Emergency State-of-the-Market Summit, a free subscription to our e-letter Liberty Through Wealth, and offers from us and our affiliates that we think might interest you. You can unsubscribe at any time. [Privacy Policy]( - Nicole Labra, Senior Managing Editor THE SHORTEST WAY TO A RICH LIFE [Why Investors Should Be Small-Minded]( [Alexander Green, Chief Investment Strategist, The Oxford Club]( [Alexander Green]( There's one equity class that is likely to seriously outperform for the remainder of the year: microcaps. For several reasons, they offer the best opportunities in the market right now. Let's start with a bit of background... In a bear market, large cap stocks hold up better than midcaps. Midcaps hold up better than small caps. And small caps hold up better than microcaps, the smallest of small cap stocks. However, history also shows that when the market lifts off in earnest, midcaps outperform large caps, small caps outperform midcaps, and microcaps outperform small caps. In other words, the whole process reverses. But it hasn't happened... yet Although the bear market bottomed in October 2022, this "reversion to the mean" hasn't happened yet. As every investor knows who is paying attention, the Magnificent Seven - Apple, Amazon, Meta, Tesla, Microsoft, Alphabet and Nvidia - are responsible for practically the entire gain in the S&P 500. SPONSORED [AI Company Signs MAJOR Apple Deal Until 2040!]( [AG Magnificent Seven]( It IPO'd in 2023. Now, it's tech will be found in iPhones and iMacs until 2040. [Will it be the next trillion-dollar company?]( Indeed, Nvidia alone is responsible for 30% of the gain in the index this year. Yet, as you can see in the chart below, history shows that microcaps outperform everything over the long haul. [Microcaps Over Everything]( It isn't even close: $1,000 invested in large caps a century ago - with dividends reinvested - is worth $12.8 million. The same amount invested in small caps is worth $.35.4 million. And $1,000 invested in a diversified portfolio of microcaps is worth $55.3 million. The trade-off for this $42.5 million in outperformance is - you guessed it - greater volatility along the way. This is especially true of those microcap companies that are not yet profitable. But pre-profit is not the same as pre-revenue. I have never recommended a microcap that doesn't already have substantial sales growth. And there's a good reason for that. Companies that are unable to support their growth with their own cash flows must tap stock and bond markets periodically to raise fresh capital. That dilutes existing shareholders or delays profits. Here's an example. Let's say a company has 5 million shares outstanding at $20 a share... or a market cap of $100 million. If the company needs to raise $20 million, it can issue 1 million new shares at $20. That would dilute existing shareholders by 20%, since there would then be 6 million shares outstanding instead of 5 million. But look what happens if the share price declines to $5. To raise $20 million, it now must issue 4 million new shares. That would take the total number of shares outstanding to 9 million, a far greater dilution. That's a big reason why small, unprofitable companies get such a haircut in a down market. But here's the good news... This reality is already reflected in share prices. It's a big reason why microcap stocks have lagged in this bull market... so far. It's also important to remember that many of the market's biggest gainers over the past few decades - companies like Amazon (Nasdaq: AMZN), Tesla (Nasdaq: TSLA), and Netflix (Nasdaq: NFLX) - saw their biggest gains before they ever earned their first dollar of profit. Investors could see that blockbuster sales growth would eventually turn into powerful earnings growth. So they bid the shares up in anticipation of big profits down the road. I expect the same thing to continue to happen in the months ahead, as microcaps with double- and triple-digit sales growth - but no profits yet - bounce back in a big way and turn in a bravura performance. This is especially true with Fed rate cuts on the way. As Ed Yardini, president of Yardini Research, points out in this week's Barron's, not only are valuations more compelling with small companies, but many of them have floating-rate debt. That means they stand to benefit the most when the Fed cuts rates. And the bigger the drop in rates - and the longer the central bank eases - the more appreciation we should see. In short, historical outperformance, low valuations, and a looming rate cut all point to microcaps as the asset class that should deliver the greatest outperformance in the months ahead. Smart investors will position themselves now for the turnaround that almost certainly lies ahead. And if you're interested in attending my [Emergency State-of-the-Market Summit]( on the matter, [click here to RSVP now](. (Clicking the links above automatically registers you for Alexander Green's Emergency State-of-the-Market Summit, a free subscription to our e-letter Liberty Through Wealth, and offers from us and our affiliates that we think might interest you. You can unsubscribe at any time. [Privacy Policy]( Good investing, Alex [Leave a Comment]( [Emergency State-of-the-Market]( BUILD AND PROTECT YOUR WEALTH - [Alexander Green Reveals the ONE AI Stock He's Invested $100K Right Now. Click Here to Find Out.]( - [How to Spot a Market Fake Out]( - [Some people go 5, 10, even 15 years without seeing a gain this big... HE just did it in 72 hours]( - [Chevron is a bargain right now...]( JOIN THE CONVERSATION [Facebook]( [Facebook]( [LinkedIn logo]( [LinkedIn]( [Email Share](mailto:?subject=A%20great%20piece%20from%20Liberty%20Through%20Wealth...&body=From%20Liberty%20Through%20Wealth:%0D%0A%0DThis%20equity%20class%20is%20likely%20to%20seriously%20outperform%20for%20the%20remainder%20of%20the%20year...%0A%0D [Email Share](mailto:?subject=A%20great%20piece%20from%20Liberty%20Through%20Wealth...&body=From%20Liberty%20Through%20Wealth:%0D%0A%0DThis%20equity%20class%20is%20likely%20to%20seriously%20outperform%20for%20the%20remainder%20of%20the%20year...%0A%0D MORE FROM LIBERTY THROUGH WEALTH [Token Offerings]( [Is the Fed Behind the Curve?]( [Token Offerings]( [Pick Up Stocks on the Dip]( [Token Offerings]( [Is the American Dream Dead or Alive?]( [Token Offerings]( [The Power of Optimism]( SPONSORED [Shah Gilani's FREE Ticker for August: CYTK]( Did you know CYTK has averaged a 9.8% gain during each August of the last 10 years? Better yet, one special play on that ticker has averaged 38% each August since 2019. Today, Manward Chief Investment Strategist Shah Gilani is revealing "undefeated stocks" like this for every month of the year. [But hurry - August's special play goes live in just hours.]( [The Oxford Club]( You are receiving this email because you subscribed to Liberty Through Wealth. Liberty Through Wealth is published by The Oxford Club. Questions? Check out our [FAQs](. Trying to reach us? [Contact us here.]( Please do not reply to this email as it goes to an unmonitored inbox. [Privacy Policy]( | [Whitelist Liberty Through Wealth]( | [Unsubscribe]( © 2024 The Oxford Club, LLC All Rights Reserved The Oxford Club | [105 West Monument Street](#) | [Baltimore, MD 21201](#) North America: [877.806.4508](#) | International: [+1.443.353.4610](#) [Oxfordclub.com]( Nothing published by The Oxford Club should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed personalized investment advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after publication before trading on a recommendation. Any investments recommended by The Oxford Club should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. The information found on this website may only be used pursuant to the membership or subscription agreement and any reproduction, copying or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of The Oxford Club, LLC, 105 West Monument Street, Baltimore, MD 21201.