Feature: “Terrifying Bull Bull”

How is there such a relentless bid for big-cap tech names?

Part of it is structural. Companies like Nvidia and Microsoft can make up a combined 15% of the S&P 500 thanks to their sheer size.

And week after week, 401k and other passive investment plans put more money into market indices, benefitting these already large plays.

But we’re seeing another trend at play too. Today’s investors are increasing their stakes in big companies by moving out of small companies:

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Investors aren’t just going all in on big-tech stocks, they’re selling off better-valued small caps to do so. (Source: BofA)

It’s a feature of the most terrifying bull market of our lifetimes.

Year-to-date, over $80 billion has flowed out of small-cap U.S. stock funds. These are the companies that can include the proverbial next Nvidia or next Microsoft.

Many of these companies trade at far more reasonable valuations than Microsoft and Nvidia today. And their growth rates can be just as impressive. It’s easier for a small-cap company to double earnings than a company that’s already earning tens of billions per year.

It’s likely that investors won’t rediscover these stocks until the big-cap names falter. But for all our criticism of investor enthusiasm and high-flying valuations in the overall market today, small cap stocks are starting to look like a relative value, especially for more patient investors.

The ol’ timers will tell you “small caps lead the way out” of a bust. For now, big tech continues to suck up global capital.

~ Addison

P.S.: With the Federal Reserve on track to cut interest rates at its September meeting, the stock market as a whole may get a shot in the arm – small caps and large caps alike.

Our research has found several pockets of opportunity in small-cap stocks this year, particularly in areas that can benefit from President Trump’s Great Reset of the U.S. economy.

Key areas that have already been attractive include the cryptocurrency space, resource stocks, and plays on next-generation nuclear technologies.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

How is there such a relentless bid for big-cap tech names?

Part of it is structural. Companies like Nvidia and Microsoft can make up a combined 15% of the S&P 500 thanks to their sheer size.

And week after week, 401k and other passive investment plans put more money into market indices, benefitting these already large plays.

But we’re seeing another trend at play too. Today’s investors are increasing their stakes in big companies by moving out of small companies:

Turn Your Images On

Investors aren’t just going all in on big-tech stocks, they’re selling off better-valued small caps to do so. (Source: BofA)

It’s a feature of the most terrifying bull market of our lifetimes.

Year-to-date, over $80 billion has flowed out of small-cap U.S. stock funds. These are the companies that can include the proverbial next Nvidia or next Microsoft.

The ol’ timers will tell you “small caps lead the way out” of a bust. For now, big tech continues to suck up global capital.

~ Addison

P.S.: With the Federal Reserve on track to cut interest rates at its September meeting, the stock market as a whole may get a shot in the arm – small caps and large caps alike.

Our research has found several pockets of opportunity in small-cap stocks this year, particularly in areas that can benefit from President Trump’s Great Reset of the U.S. economy.

Key areas that have already been attractive include the cryptocurrency space, resource stocks, and plays on next-generation nuclear technologies.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Our forecast will feel obvious in hindsight and controversial in advance — the hallmark of a Grey Swan.

Most analysts we speak to are thinking in terms of the history of Western conflict.

They expect full-frontal military engagement.

Beijing, from our modest perch, prefers resolution because resolution compounds its power. Why sacrifice the workshop of the world, when cajoling and bribery will do?

Taiwan will not fall.

It will merge.

Wars, technology races, and political upheavals — all of them rest on fiscal capacity.

In 2026, that capacity will tighten across the developed world simultaneously. Democracies will discover that generosity financed by debt carries conditions, whether voters approve of them or not.

Bond markets will not shout so much as clear their throats. Repeatedly.

Taken together, the seven Grey Swans of 2025 behaved less like isolated events and more like interlocking stories readers already recognize.

The year moved in phases. A sharp April selloff cleared leverage quickly. Policy shifted toward tax relief, lighter regulation, and renewed tolerance for liquidity. Innovations began to slowly dominate the marketplace conversation – from Dollar 2.0 digital assets to AI-powered applications in all manner of commercial enterprises, ranging from airline and hotel bookings to driverless taxis and robots.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!