What a year for small caps in 2020! The Russell 2000 Index was up over 20% in 2020 and shows no signs of slowing in 2021. How could small caps rally so significantly in a year that saw COVID infect over 85 million people globally and kill nearly 350,000 Americans? How could small cap stocks rally in the face of stay at home orders causing thousands of small business owners to close their doors… forever? I could go on and on but the answer is a simple one. 2020 was the year of the speculative investor; much like 1999 was (cue Prince’s song). Many retail investors I know, and their teenage children, made money hand over fist in 2020 in the stock market. A friend of mine has a 16 year old son who is an investor. His son told me making money in stocks is as simple as buying Tesla and any vaccine stock. He has been right and continues to be right. I have been investing since I bought my first shares of Walmart & Walgreens back in 1987. I have never in my investing career seen an equities market for small cap stocks this hot. Take a look at the charts of these stocks: JAGX, FRSX or NNDM. This is amazing! Will this last? 

Obviously, nothing goes up forever. However, in the going up process I believe it is important to ensure there is a “there, there” when it comes to the core business of these rocket ship stocks. For example, cryptocurrencies are soaring in value and as such, a number of companies have pivoted from their core businesses to become somehow involved in cryptocurrency. This frightens me as I know these companies are simply trying to latch on to the mania that is cryptocurrency with no underlying ability to make money other than via share issuances for cash from investors. Another mania is small cap companies adopting a COVID product development strategy. While I think it is great that companies are looking to solve the riddle that is COVID, I question companies with a history of consistent dilution and minimal progress suddenly latching on to the COVID madness. 

Be smart and do your homework. Trusting the masses works until it doesn’t and I have seen many people blow up their lives chasing steam. I wish you a safe and healthy 2021 and happy hunting for returns in 2021! 

Tickers to consider: SSVR.CN, AAU.V, CEI, FRSX, TZA, PPCB,  & JAGX