While most investors and traders flock to indexes that get the most attention — like the Dow Jones or S&P 500 — it’s important to note that others do exist.
In fact, some of the best Russell 2000 stocks are often overlooked. I’m talking about stocks that could add exposure and diversify to a portfolio.
In a nutshell, the Russell 2000 Index tracks 2,000 small-cap companies with market capitalizations ranging from $300 million to $2 billion. These stocks tend to have tons of growth potential but also have less stability and resources than bigger and more established companies.
With that in mind, here’s a quick rundown of what you need to know about the Russell 2000, how it works and five of the best Russell 2000 stocks to invest in right now…
You’re probably asking yourself “Roger, what is this fascination you have with the Russell 2000?”
Well, let me explain…
If you compare the S&P 500 to the Russell 2000, you’d normally note that the indexes travel along the same general path. And as I explained two weeks ago, the typical correlation between the S&P 500 and Russell 2000 over the past 30 years is 97%.
But over the past several months, I’ve repeatedly watched small-cap stocks lag behind the overall stock market.
If you look at both indexes, you’ll see that the Russell 2000 peaked on Jan. 17, while the S&P 500 hit a fresh all-time high on Sept. 2 and has continued to move higher.
So, why haven’t things been going as well for the Russell 2000?
The answer is rather simple: U.S. President Donald Trump wants to go all in on the trade war with China.
Stocks that trade in the Russell 2000 are significantly smaller — and more vulnerable — than the monsters that make up the S&P 500. When something drastic happens to the economy, smaller stocks are more susceptible to market volatility.
But lately I’ve noticed something strange happening in the Russell 2000… it’s pricing in a Biden win.
I’m not here to tell you what is better for the economy or who I think will win the upcoming U.S. presidential election — President Donald Trump or former Vice President Joe Biden. This could even just be an abnormality.
But the bottom line is that the Russell 2000 is making major headway, and I want you to reap all the benefits. That’s why I’m giving away the five best Russell 2000 stocks that could continue trading even higher.
After you watch today’s video, share your thoughts in the comment section below. Do you like to trade Russell 2000 stocks? If so, which ones? Out of all the best Russell 2000 stocks I mentioned in today’s video, which one is your favorite and why?
P.S. I hate to be the bearer of bad news…
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