Carnegie Market Blog


New Highs for Small Caps, Cord-cutting and Akron’s Hot Real Estate Market

Posted by Brent Luce on May 23, 2018 4:35:44 PM


As you know, the stock market has been a bit weak this year, with the S&P 500 trading about 6% below its January high.  Interestingly, small- and mid-cap stock indices have diverged from the S&P 500 and are trading at all-time highs.  It would be very unusual for this condition to exist as the market enters a new bear market, so I would consider this to be a bullish sign.  In thinking about this unusual divergence, I suspect that the huge swing to ETF trading/investing is an influence.  The large cap companies are the constituents of the major ETFs.  When investors buy and sell based on shorter-term emotions, more than ever, they are using ETFs as their tools.  This, in turn, moves the larger cap indices while the smaller companies not in the major ETFs are less affected.  With this in mind, it may be that the new highs in smaller companies are reflective of strong business conditions/results while the weaker large cap stocks are reflecting the weaker sentiment and fears that have entered the picture this year.   MORE: Why Soaring Small-Cap Stocks Signal Bear Is At Bay

Divergence Between Small and Large Cap Stocks


Kids and Cable

Most of us have probably noticed our own migration from watching traditional television to absorbing information and entertainment from other sources.  “Cord-cutting” is becoming commonplace and the thought of having to plug a cable cord into the back of our televisions is starting to seem as archaic as actually depending on a landline phone.  Nowhere is this trend more pronounced than in young people who were born into the wireless age.  Just in the past year, viewership of Nickelodeon, Disney Channel and the Cartoon Network is down a whopping 20% and in the past decade (chart below), viewership is down 50%.  Take a wild guess where all these viewers are going – this is the poster-child of disruption.   MORE: Netflix-Loving Kids Are Killing Cable 

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Topics: distruption, Cord-cutting, Housing

1st Half Performance, Solar Boom, iPhone Disruption

Posted by Brent Luce on Jul 5, 2017 4:55:44 PM

First Half Market Behavior

Despite the political drama and other fear-inducing events that have occurred this year, the stock market has been fairly strong this year.  This strength, however, has not been uniform.  MORE:  Year to Date Market Summary  Below are some charts illuminating some of the trends and dispersion within the market so far this year:

-- Dividend paying stocks have lagged this year, while growth stocks have outperformed.  I believe this is due to several factors, including an increased appetite for risk, dividend heavy sectors experiencing fundamental weakness and the perception of higher interest rates on the horizon.

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Topics: Technology, distruption, solar

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