An exceptionally tight circle of mega-cap stocks dominate the benchmark averages. Because the passive indexing craze automatically funnels trillions of dollars right into the top of the S&P 500 Index ($SPX), the vast majority of the equity landscape has been completely starved of liquidity.
In my never-ending search for a road less travelled, I have spent more time this year becoming familiar with a part of the stock market I always thought of as “my father’s” – micro-cap stocks. Not because they are some old-fashioned way to invest. But because my late father, who taught me to chart when I was just 16 years old, treated them as his playground. Mostly stocks priced under $10 a share, and often with weird names and market caps under $2 billion. Sometimes well below that level.
