Core Insights - The article discusses the potential for index ETFs to be a significant part of an investor's portfolio, particularly focusing on small-cap, value, and growth ETFs for 2026 [1] Small-Cap ETFs - There is an increasing belief that small-cap stocks will outperform in 2026, following a period of strong performance over the past six months, despite trailing large-cap stocks previously [2][3] - The Federal Reserve's anticipated rate cuts are expected to benefit small-cap companies more significantly, as lower borrowing costs can stimulate domestic demand [3] Value ETFs - The market has seen growth stocks lead, but there is speculation that 2026 could be the year for value stocks to outperform due to investor nervousness and potential economic benefits from lower rates and tariff reversals [5][6] - Recommended value ETFs include the Vanguard 500 Value ETF and the Schwab U.S. Dividend Equity ETF, which focus on value stocks and companies with strong financials and dividend histories [7] Growth ETFs - Large-cap growth stocks have been dominant in the market, particularly those associated with AI, and this trend may continue as AI technology develops [8] - Key growth ETFs include the Vanguard Growth ETF, Vanguard Mega Cap Growth ETF, and Invesco QQQ ETF, which have shown strong performance relative to the broader market [9] Investment Recommendations - The Vanguard Mega Cap Growth ETF is highlighted as a top choice for 2026, given its concentration in leading AI stocks, which are expected to continue driving market performance [12]

Core Viewpoint - Markets are experiencing rapid shifts, prompting investors to reconsider portfolio diversification strategies [1] Group 1: Market Conditions - Inflation remains persistent, affecting investment strategies [1] - International stocks are trading at significant discounts, presenting potential opportunities [1] Group 2: Investment Opportunities - Small-cap stocks may be entering a phase of earnings recovery, which could attract investor interest [1] - Some of the best-performing ETFs may emerge from sectors that have been overlooked for an extended period [1]

Group 1 - The S&P 500 index increased by 0.1% and the Nasdaq composite rose by 0.2% on Thursday, supported by economic data suggesting an interest-rate cut may be imminent [1] - Small-cap stocks are nearing all-time highs, indicating strong market performance despite major indexes pausing [2] - Key inflation data is expected to be released on Friday, which will be crucial for Wall Street's assessment of the interest-rate outlook [1] Group 2 - Small caps are leading the market, outperforming large caps, with notable stocks like Eli Lilly and Robinhood being highlighted [4] - The current market season is characterized by a focus on stock buybacks, which may influence investment strategies [4] - New AI stocks are gaining attention from top funds, indicating a shift in investment interest towards emerging technologies [4]

Core Viewpoint - The article discusses the importance of reliable information in investment decisions and emphasizes that historical performance does not guarantee future success [1]. Group 1: Company Information - Investor's Business Daily (IBD) provides information for educational purposes and does not constitute an offer or recommendation to buy or sell securities [1]. - IBD sources its information from reliable sources but does not guarantee its accuracy or timeliness [1]. Group 2: Industry Insights - The investment industry relies heavily on accurate data and analysis to guide investors in making informed decisions [1]. - Historical investment performances are highlighted as not being indicative of future results, stressing the need for caution in investment strategies [1].

NASDAQ on pace to snap a seven-month winning streak as tech drags. Joining me now, markets and data editor Jared Blickery, as well as Michelle Schneider, market gauge. com chief strategist.Jared, I want to start with you. Give us a look at the month here because we saw a lot of damage within tech and that looks like it's going to drag the NASDAQ lower on the month. >> You bet.And let's start with the uh Wi-Fi Interactive. And I'm going to pull up the month to date and this is going to be as of the close Wed ...

Market Trends & Opportunities - Macroeconomic environment is constructive for risk assets heading into 2026, identifying opportunities across small caps, international markets, and fixed income [1] - Small caps, as indicated by the Russell 2000, are up nearly 10% this year, while the S&P 500 is up approximately 135% [2] - International developed markets are up 25% this year [10] - Broadening of equity markets is expected, with opportunities across sectors within the S&P 500, particularly in AI and healthcare [7][8] Federal Reserve & Interest Rates - Anticipation of Federal Reserve rate cuts has positively impacted small caps [2][3] - Small cap performance is correlated with the perceived probability of Fed rate cuts [3][4] - Expectation of Fed rate cuts makes it sensible to build income in portfolios beyond government bonds [13] Small Cap Innovation & AI - Small caps are seen as AI innovators with opportunities in niche markets, not directly competing with hyperscalers [4][5][6] - There are opportunities for small caps to compete in niche AI markets [5] International Markets - Fiscal expansion in Germany and a new administration in Japan supportive of fiscal expansion are expected to drive growth in international markets [9] - International markets are expected to continue outperforming the US, though not necessarily at the expense of the US market [10][11] Investment Strategies - Downside protection is important in portfolios due to market uncertainty and complexity [12][13] - Strategies for generating higher yields include international stocks with higher dividend yields, securitized high yield, and option-based income strategies within the S&P 500 [13][14] - Exposure to mega-cap tech AI hyperscaler trade should be market cap neutral [15]

Core Viewpoint - Small-cap stocks are becoming undervalued following recent market sell-offs, particularly affecting AI growth companies [1] Group 1 - The recent market selling has primarily targeted AI growth names, leading to a decline in their valuations [1] - As a result of this market activity, small-cap stocks are starting to appear cheap again, presenting potential investment opportunities [1]

Investment Strategy & Outlook - Goldman Sachs Asset Management suggests diversifying portfolios and looking outside the US for better returns, recommending a "get down, get client, and get active" approach in equities [1][2] - The firm is constructive on small caps both in the US and outside the US [2] - Real estate, particularly on the debt side, is starting to look appealing [8] Small Cap Opportunities - Small cap growth strategies can capture more upside, offering an alternative to low volatility strategies [4] - Intra-stock and inter-stock correlations in the small cap sector are at multi-year lows (5-10%), presenting alpha opportunities [5] - Small cap exposure is viewed favorably as many investors are avoiding it [7] Emerging Markets & India - Broad emerging markets have outperformed the US this year, but single-country performance varies [9] - Goldman Sachs analysts have moved from underweight to overweight on India [9] - While broad EM is up 20-30% year-to-date, India is only up about 3% [9] - India's valuation has retraced from a 25 times multiple to a 23 times multiple, and its premium versus other EM has decreased from the '9s to closer to 4-5 [11] - Government and policy reforms, including tax cuts and bank deregulation, make India an interesting place to look for investment [12]

Market Outlook - Macro Risk Advisors expects the S&P 500 to reach at least 7,000 by early next year, potentially rising as high as 7,500 to 7,600 [3] - The market is attempting a rotation away from danger, with mega caps making indexes appear worse while the majority of stocks try to hold steady [3][4] - The market structure has become highly concentrated in recent years [4] - The industry notes that a midterm election year typically involves a major correction or cyclical bear market in equity markets, suggesting a potential shakeout next year [11][12] Technical Analysis & Indicators - Semis are overbought, with the semi-index 35% above its 200-day moving average and over 90% of stocks above their 200-day moving average, historically indicating a potential 7-10% decline [8] - Small caps are making new highs, but the AD line is making almost new lows, which is a divergence that is very important to monitor [14] - Interest rates are key, and the 10-year yield rising above 420 basis points (420%) could lead to a mini-2018 scenario [14] Market Breadth & Participation - The industry believes that expecting the market to expand and see broad participation is unlikely in the near term, possibly not until after the next cyclical bear market [6] - Breath has been abysmal within small caps, indicating a lack of support from real economy stocks [13]

Core Insights - Small caps are generally US-based companies with a majority of sales from the US, contrasting with large caps that have a higher percentage of foreign sales [1] - In times of geopolitical uncertainty, investors may prefer small caps as a hedge due to the perceived stability of the US economy [1] Company Summaries MIND Technology, Inc. (MIND) - MIND Technology is based in The Woodlands, TX, providing technology solutions for oceanographic, hydrographic, seismic, and maritime security industries [3] - For the six months ended July 2025, over 56% of MIND's revenue came from Norway, highlighting its reliance on international sales [3] - In Q2 fiscal 2026, MIND reported a net income of $0.24 per share, a turnaround from a net loss of $0.11 per share in the prior year, with revenues of $13.6 million, a 35% increase from $10 million year-over-year [4] Perma-Pipe International Holdings, Inc. (PPIH) - PPIH, headquartered in Rolling Meadows, IL, specializes in manufacturing specialty piping systems and leak detection systems [6] - The company has received approval from Aramco, expanding its total addressable market and aligning with Saudi Vision 2030 objectives [7] - In Q2, PPIH reported net sales of $47.9 million, a 27.7% increase from $37.5 million in the same period last year, driven by stronger sales in the Middle East and North America [8] - As of FY ending January 31, 2025, 67% of PPIH's sales were to foreign customers, indicating a significant international market presence [8]