Today, we want to discuss emerging trends in the market. Trends that should see plenty of profits moving forward, regardless of economic shocks caused by COVID-19 or the election volatility.

Some trends that we see moving prices higher and some to the downside.

First, let’s talk about how the major indices are moving. We can then use that info to branch off into more specific sectors we see major investment opportunities.

Russell 2000 Index (INDEXRUSSELL: RUT) vs. S&P 500 Index (INDEXSP: .INX)

These stock indices usually have a high degree of correlation and therefore perform in sync with each other. In the last few years, however, they have diverged significantly.

Historically, when the Russell has performed worse than the S&P, it has rebounded to outperform the larger market-cap index for the next three years. Since the election, the Russell is up 3% more than the S&P 500 and still has roughly 12% more to go before it makes up its ground from the last few years.

Keep in mind that when the indices are growing, Russell 2000 stocks grow 6.5% higher, on average, than S&P 500 stocks.

What does this mean for 2021 and specific investments?

As we recover from the pandemic (however slowly) and the trade war tensions with China diminish, investors can stay away from the FANG stocks and concentrate on some emerging stocks poised for growth.

Watch the full interview to find out what stocks we think are going to boom in 2021.

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