The Stock Market Trend: What’s in Your Boat?

The stock market trend as measured by the S&P 500 stock index (the black line) has had a difficult time making any gains in 2015. SPY in the chart below is the SPDR S&P 500 ETF seeks to track the investment results of an index composed of large-capitalization U.S. equities. It’s the stock index most people talk about.

But, what is more interesting is the smaller companies are even worse.

The red line is the iShares Russell 2000 ETF (IWM), which seeks to track the investment results of an index composed of small-capitalization U.S. equities.

The blue line is the iShares Micro-Cap ETF (IWC), which seeks to track the investment results of an index composed of micro-capitalization U.S. equities. This index provides exposure to very small public U.S. companies.

Small Cap Laggards

Clearly, smaller companies are having an even more difficult time attracting enough demand to create a positive trend lately. This may be the result of a very aged bull market in U.S. stocks. It could be the very early stages of a change in the longer term direction.

We’ll see…

I don’t worry about what I can’t control. I instead focus only on what I can control. My focus is on my own individual positions risk/reward. I defined my risk/reward.  If I want to make a profit I have to take some risk. I decide when to take a risk and when to increase and decrease the possibility of a loss.

Successful investment managers focus less on what’s “outside their boat” and focus on what’s “inside their boat.”

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