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Ripple Effect

Feature: “Terrifying Bull Bull”

Loading ...Addison Wiggin

August 18, 2025 • 1 minute, 50 second read


mag 7market valuationSmall Caps

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.)


The Hindenburg Five

February 24, 2026 • Addison Wiggin

The stock market “rebalancing” is a polite way to put it. Energy and health care are getting a healthy boost. But tech hardware and software makers are still getting dressed down and have been asked to report to the principal’s office.

The great rotation underway has triggered a series of “Hindenburg Omens.” Five have occurred in recent weeks.

The Hindenburg Five
Piercing The Veil

February 23, 2026 • Addison Wiggin

The S&P 500 has traded in a 3.7% range over the past two months — less than half the 20-year median of 8.6%. One of the tightest ranges in modern history.

In trader parlance, the indexes are “flat,” a setup that often materializes before a sell-off at the top after a multi-year bull market.

Goldman Sachs told its own traders to be aware that institutional trading activity resembles a VIX reading near 35. Rather than a reading of 20, where the VIX has been trading over that same 2-month period.

The U.S. software ETF, IGV, tested its April 2025 lows last week and trades roughly 35% below its peak. The “SaaS-pocalypse” in software companies reflects the fear of Citrini’s 2028 scenario happening in real time.   That divergence now exceeds the spread seen at the peak of the Great Financial Crisis.

Under the surface, the “great rotation” we wrote about last week is threatening to widen.

Piercing The Veil
Oh. Canada

February 23, 2026 • Addison Wiggin

Despite its overly-educated 40-million-plus population, on a GDP per capita basis Canada is null. Collectively, the Great White North would rank as America’s second-lowest state, coming in above Mississippi, but below Alabama.

Oh. Canada
Matt Milner: SpaceX + xAI: What It Means for You

February 20, 2026 • Addison Wiggin

SpaceX is the most valuable private startup in history — and if its success continues, it might become the most valuable public company in history.

After all, as Musk famously said in 2023, “I have never lost money for those who invest in me and I am not starting now.”

For investors, SpaceX has been a wild, joyful ride — and now the journey continues!

Matt Milner: SpaceX + xAI: What It Means for You