What Is Happening With The 2000 Companies In The Russell 2000? What Investors Need to Know
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Today's Guest: Anne-Marie Baiynd, American author, financial analyst, and technical analyst.
Today's Guest: Anne-Marie Baiynd, American author, financial analyst, and technical analyst.
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00:00I want to hear your thoughts on the IWM.
00:02Let's continue this train of thought here.
00:04And what is happening inside those 2000 companies
00:08that seemingly can't find their way in any type of market
00:13because S&Ps have been just kicking butt,
00:15Qs kicking butt, and then you got the IWM
00:18that's just getting kicked in the butt.
00:20What turns the story around, Ann Marie?
00:22So, you know, we talk a lot about the economy
00:28and the market being bifurcated, right?
00:30There are obviously some places
00:32that are really not doing well.
00:35We can see weakness in the economy in all kinds of spaces.
00:40And if I were a betting man,
00:42I would say that what's happening in the Russell
00:46is not so much interest rate sensitive as economy sensitive.
00:52Economy sensitive.
00:54And so what I see is big players using any spikes
00:59in the IWM for exit liquidity.
01:02And so for those of us that maybe aren't super familiar
01:05with exit liquidity, it's where the big bounces
01:09make those folks with the highest holdings
01:12in a particular instrument leave the market versus enter.
01:18And so the reason that I suspect we've got this stall out
01:23here is because if we went in there
01:26and we looked at all of these companies
01:30that struggle with cashflow,
01:32I don't think it's all interest rate information.
01:37And that's why when we see these notices
01:40about interest rates, we just say,
01:42hey, you know, we should be moving up, but we're not.
01:47So there's something else that's correlating
01:51with this move versus just interest rate.
01:54It becomes a much more complicated play.
01:59I've argued for a while too, that maybe, you know,
02:02there's a lot of these companies that may benefit from AI,
02:05but there's no direct benefit for a lot of these companies.
02:07There's no direct revenue streams coming, you know,
02:10and if you think it's AI versus the world here right now,
02:14the IWM is kind of in the wrong, you know,
02:16the wrong spot here because most of those companies
02:19probably aren't creating the technology.
02:21They're probably users of the technology.
02:23Exactly, exactly.
02:26And they're using it and then cutting staff because of it,
02:30because they're still trying to make the margins.
02:34And again, you know, I don't know, you know,
02:38if they can, you know, reinvent the wheel here,
02:39like maybe it's going to be, you know,
02:41those margins are going to be, you know,
02:43wide enough that they're going to turn it around because,
02:45but at the end of the day,
02:47there's still a trade-off here too,
02:48because as you know, you cut staff and you know,
02:51you lay more people off because AI is replacing those jobs.
02:54I mean, there's less consumers or less dollars out there
02:56to consume too.
02:57That's why I've always been a little bit, you know,
03:00it's hard to just say, yeah,
03:01AI is going to make everything better.
03:03It's going to make things better for some companies,
03:05but it's not going to make things better for all companies.
03:08Oh, a hundred percent.
03:09And we saw that in the age of the internet, right?
03:13The 2001, a lot of occupations absolutely disappeared.
03:20And we've got a new,
03:24I don't know, I guess we've got a new work paradigm.
03:26I'm not really comfortable doing any investment
03:32inside of the IWM unless something is really, really strong.
03:37And so buying that as a whole, you know,
03:40that is just not the pond you want to fish in
03:43unless you're doing the same thing.
03:45You bought it and you're like, holy cow, this isn't moving.
03:50Next big spike up, I'm out of here.
03:53Or you're saying to yourself,
03:55oh, next big spike into major resistance,
03:59I'm going to take a short.