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.)

The very moment The State enters the economy in any way, shape or form – to tax one group and subsidize another… to set the price of a single good or service… to impose itself on a single contract… to claim a monopoly on the production of money, to demand its fiat be used, and that others be prohibited… to require a license, permit or other permission… to put its flabby finger on a single scale… – is to simultaneously render property contingent and the market subject to force.

American household “wealth” — stocks, bonds, real estate, savings — has inflated by $60 trillion in just five years. A full $100 trillion since the 2009 crisis lows.

If you’re a glass-half-full guy, that’s the magic of staying invested through cycles.

If you’re glass-half-empty guy, you see the risk and ask: how much of the current $60 trillion could vanish just as fast in the next down cycle?

Stephen Miran’s appointment to the Federal Reserve isn’t just another personnel move—it’s the placement of Trump’s Reset architect inside the very institution that will help carry out America’s most ambitious economic overhaul in generations.

Without getting into the weeds, Miran, the mastermind behind what’s been dubbed the “Mar-a-Lago Accord,” outlined a comprehensive plan to flip the U.S. dollar’s reserve status from a burden into a bargaining chip. To turn America’s towering debt from an embarrassment into leverage. And to reorient the entire global economic structure in Washington’s favor.

Traders heading to Jackson Hole next week say Powell’s speech will be read less for what it says and more for what it omits.

“If he dodges inflation risks entirely,” one hedge funder whispers, “that’s the green light for cuts.”
Another says the real suspense is whether Powell tips his hand on the Fed chair succession list — Bessent’s “big list” of 10–11 candidates is already making the rounds in Wyoming hotel lobbies.

The wild card? A sudden geopolitical flare-up, which could force Powell to pivot mid-sentence from rate policy to risk management. Or, more likely, Donald Trump with his proverbial thumb on the scale.

American household “wealth” — stocks, bonds, real estate, savings — has inflated by $60 trillion in just five years. A full $100 trillion since the 2009 crisis lows.

If you’re a glass-half-full guy, that’s the magic of staying invested through cycles.

If you’re glass-half-empty guy, you see the risk and ask: how much of the current $60 trillion could vanish just as fast in the next down cycle?

Traders heading to Jackson Hole next week say Powell’s speech will be read less for what it says and more for what it omits.