Transcript:
Tom Vaughan: Hello, everybody, welcome to Monday, the S&P 500 was up almost .2%. Today, I have two main things that I think are interesting to talk about today. Number one is: “What’s happening with small cap stocks.” And number two is: “What’s happening with earnings as a whole.”
So, first of all, if you look like today, for example, the Russell 2000, which is kind of a smaller company index was up almost 1.2% today, which is a lot more than the S&P 500. And we’ve been seeing this kind of over performance and that small cap stocks for about a week and a half now. And that’s not completely unusual. And you because when things start to recover, small cap stocks generally do a lot better. They’re a lot more sensitive to the economy, they don’t have hundreds of billions of dollars in cash like an Apple does, sitting on the sidelines.
And so as the economy recovers, their earnings start to come back in, and a lot higher than normal. And so, that’s something to keep an eye on. Because, I really think there’s a lot of money to be made in that particular category. We do have some focus now inside the portfolio and kind of that small cap area, mainly because of this exact situation that we’ve been expecting so far. A lot of restaurants in different places that are, these aren’t the biggest companies in the world.
So that’s why we’re seeing some of this. But the other piece that’s really fascinating right now is just the earnings story. So there’s a company called Factset. They track the earnings for companies. And they have a kind of a thing that they started in 2008 to see how many companies have an upside surprise. So far, we’ve had 84% of companies that reported earnings have had upside surprises, which is a record going back to 2008. We’ll see what happens throughout the rest of the earning seasons.
But today’s market, was kind of flat what was waiting because we have one of the bigger chunks of earnings coming out right now, Tuesday through Thursday, there’s going to be 40 of the S&P 500 companies that report earnings. And so, again, I think this is another big theme. Kind of got your small stock theme, as things recover. You got your reopening theme. You got your pent up demand theme. You got your the Federal Reserve’s theme, that they’re not going to raise rates. All of these different pieces, but one of them is this upside surprise. That the analysts that are looking at these earnings have not really been able to calculate how much earnings are going to really grow. And so the expectations are at one level, and then the companies come in at a much higher level. So we’ll see if that continues.
Again, some big companies coming through here too. So still seeing some really nice movement altogether in the market. I see things happening at a at a nice pace. I really think things are going in the right direction. So looking forward to seeing what’s going to happen tomorrow. Thank you very much.