WARNING! This TREND **BROKE**

hey everyone me Kevin here it's your

favorite long-term investor who loves to

make money because you can be a

long-term investor and trade out of bad

positions and allocate to better

positions but folks we got to talk about

the reality of where people are trading

into right now and it's quite

interesting the allocation because a lot

of folks right now are hoping and are

betting and I originally have made this

statement as well that I believe there's

a good chance small caps would would see

a quick rebound during whenever a

rebound would come so far that has not

been happening in fact take a look at

this okay I'm going to show you this

chart but before I show you this chart

it's it's just worth seeing a little bit

of quick math okay and I know a lot of

us don't like math but the Russell 2000

so the r2000 if you divide this by the

NASDAQ 100 these are our main indices

right here that we watch right if we

divide these over each other and let's

say the Russell I'm just going to make

up up numbers here let's say the

Russell's trading for 50 and the Nas is

trading for 200 that would give you a

ratio of 0.4 right well now let's say

the NASDAQ went up to 400 while the

Russell only went up to I don't know 70

right and so now if we divide this the

the what we're trying to see here is

does the ratio gets smaller or bigger

and it gets a lot smaller now the ratio

is 1.75 so in other words

as the NASDAQ goes up so bigger attack

goes up what's happening to small caps

and how do we look at yields in relation

to that and we get a really interesting

conclusion that I think you're going to

like but of course first I have to just

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and let's take a look at the chart okay

so at first glance this is a little

tricky but what I want you to know is

you want to watch this 10-year treasure

yield which is right here from 2018 when

we're up at three percent notice how

when it goes down the blue line is

following it notice that blue line is

following everywhere it goes so as the

10-year treasury yield fell the ratio

got smaller which means that as treasure

yields fell people were buying more tech

stocks and less small caps right so

yields down people are buying and we'll

write it down yields down more

uh Tech

less

small for yields down that makes sense

right because we're discounting the

future cash flows uh of

um of of tech much more when rates go up

when rates go uh down we don't have to

Discount as much so we could be more

bullish on Tech and what happens Tech

valuations often go up often at least

that's what we're seeing here to the

burn really of a small caps because

again as that blue line goes down the

ratio between the uh the Russell and the

NASDAQ goes down and uh and it just

basically means more money is flowing

into Tech right uh okay but then what

happens when yields go up well yields go

up often not always you see Tech go down

in favor of small caps so when this

ratio goes up and yields go up people

are buying small caps

more and less big Tech that is what's

happening here and this has been pretty

consistent this relationship okay now

we're going to get rid of all this and

we're gonna find something interesting

the relationship is getting destroyed

look at this the relationship is in

tatters

zoom out perfect relationship over here

and all of a sudden over here we've lost

it the relationship is getting destroyed

why is this happening well why it's

happening and what's happening could be

two very different things but let's

clarify first what's happening here so

treasury yields are going up

as treasure yields in the past went up

people invested in small caps more than

they did Big Tech that's not what's

happening right now what's actually

happening right now is people are

investing more money into big Tech and

less is flowing into small

uh which is the the ratio of the two is

the blue line over here uh and so you're

seeing more of this flight to safety

probably because of the uncertainties of

inflation and pricing power and War I

would say this last little drop that

you've had over here is probably War

based but the first breakdown over here

is because of inflation concerns so in

other words right now it seems like

investors specifically retail leading

the charge like we saw yesterday are

preferring big tech companies over

Smalls and when you look at just the

charts today I mean today's not an

overall Green Day and look at Tesla it's

a 3.3 percent uh it's it just got

rejected at the 10 35 the 61 8 Fibonacci

line when Tesla is absolutely killing it

you go over QQQ you're actually negative

on the day so if we're just pulling out

some of the big guys like Tesla and

apple their perform warming well today

now this isn't going to obviously work

perfectly I mean matterport's a small

cap but the point is that more broadly

if we zoom out over here and this makes

sense small caps have absolutely

underperformed the big Tech and

unfortunately that Trend doesn't appear

to be getting better if anything it

appears to be getting worse and so I

wanted to talk about that in this video

because when we're positioning and we're

making bets on small versus a larger cap

right now at least large caps winning

and this is a ratio to pay attention to

when we actually finally start seeing

small caps recover maybe that's the time

to jump in here but so far we're not

actually seeing that small cap recovery

yet don't get me wrong I mean I'm in

matterport I'm in palantir and I've got

some Sofi though I just reduced a little

bit of my sulfide position specifically

because we have the lending risks and

the small cap transition and instead

I've moved into uh just as this is about

two hundred thousand dollars so we're

talking about one percent of the

portfolio uh it made it made a small

little move in into a different company

uh whom yesterday I really fell in love

with substantially I already owned the

company but I added uh more allocation

to it after I went through their last

quarterly report it's amazing we'll talk

more about that at different time of

course I've already sent that alert to

everyone in the stocks and psychology a

money group and in our course member

live stream this morning uh we're gonna

be spending a lot of time talking about

some sweet trends that are going on uh

within within the uh consumer world but

uh this year pay attention to it

consider this in your investing and if

you want to track this just all you have

to do is remember divide the Russell by

the NASDAQ you get the ratio compare it

to what the treasuries are doing and

when we start seeing this ratio go back

up that's going to be a good sign for

small caps overall so if I were to write

down uh let's say a little rule of thumb

I might go to let's just say cnbc.com

really quick and I'll take what the

Russell actually is which is 2069

divided by what the NASDAQ actually is

which is 14 000. that puts us at about

14.69 so I'm gonna have to see the

Russell probably go to about 24. I mean

even if we get 400 points on the Russell

it's barely gonna move that and that'll

almost be 20 right there uh you know

that would bring us uh no actually that

would bring us back in line 17.5 that

would bring us right over here probably

need the NASDAQ to stay stable and the

Russell to go to about

25.69 and then we'd be here at 18.2 we'd

almost be back lined up with uh with

that treasury yield curve so you've

definitely got a rust lag and uh and

that of course assumes Nas staying

stable but my opinion interesting thing

to observe doesn't necessarily mean you

always want to follow the trend but if

you're making big Investments solely

into small caps you might at least for

the time being it looks like be getting

slightly left behind and this is not me

to me trying to bag on small caps don't

get me wrong again I got some small caps

uh but um yeah it's it's a trend that we

need to be aware of it's uh the the

previous Trend that we had with uh

yields Rising small Caps doing well it's

not happening it's broken apart all

right folks check out my kevin.com extra

check out the programs on building your

wall thanks so much and we'll see in the

next one goodbye