By: Bill Spencer — November 16, 2020
Small-Cap Monday - Here's the World's First "Moonshot" ETF
Good morning my friend.
Happy Monday to you and yours.
As the world looks on in awe and envy... America continues to wade through the results of the November 3rd Presidential election.
Many observers say Joe Biden has won. Other observers say President Trump will win once the courts have spoken.
So right now we have two candidates who each claim the mantel of leadership. Each candidate is simultaneously "President" and "Not President".
It's like "Schrodinger's Cat" only with nuclear codes.
I'm actually hoping the election stays undecided well into the spring. I'd love watching each candidate attempt a State of the Union address while desperately trying to shove the other guy away from the microphone.
Trump: "My fellow Americans..." Shove!
Biden: "Ladies and Gentlemen of..." Shove!
Trump: "It is with a happy heart that I..." Shove!
Biden: "It is with a heavy heart that I..." Shove!
Trump: "The economy has never been bet..." Shove!
Biden: "The economy has never been worse..." Shove!
I'm kidding of course... Because I'm in a happy mood.
For one thing, I just tested negative for coronavirus (or "the vid" as my nephew calls it).
Plus, The holidays are coming.
And 'vid' or no 'vid', there's nothing better than the holiday season in New York City.
My family and I may have to celebrate by way of the Zoom app... but celebrate we will!
Finally, the market is roaring, which tends to put a smile on many folks' faces.
(Click any image to enlarge)
Small-caps are doing particularly well, as you can see by the Russell 2000's +6.07% performance, above.
In fact, this past week the Russell 2000 put in a record closing high - 1,740.75. The last time this small-cap proxy made a new all-time high was back on August 27, 2018 (the purple arrow).
Since the start of the 2020 fourth quarter small-caps have really crashed it.
Both of our small-cap proxies lead the major market averages, and RUT is up by double-digits.
The last-place performance of the Nasdaq doesn't bother me.
For one thing, in 2020, the Nasdaq is up by +31.84%, even factoring in the September "tech wreck".
Also, if you've been reading me for a while, you know I'm a self-described "tech bull." I have a very optimistic view of technology, based on my belief that nearly all human problems can be, and will be, mostly or entirely solved by technology.
I even started a paid trading service called Swing Tech Trader so I could share my technology "finds" with my readers.
Now, on the one hand it's super-easy to invest in tech. Just buy the FAANG stocks... or ETFs that track them.
But everybody's doing that...
Your real moonshot returns come when you get in on early-stage technology companies.
Which brings me to today's recommendation, which actually has "moonshot" in its name.
Actually, this is more of a "deferred" recommendation. That is, it's not something I'd buy into today... but it's something we most definitely will keep our eyes on.
It's a new ETF -- launched this past Thursday-- that tracks early stage companies working in innovative technology fields. Things like Clean Energy... Drones... and Driverless Cars.
The Direxion Shares ETF Trust - Direxion Moonshot Innovators ETF (MOON) invests in 50 early-stage companies that...
- Show the greatest investment research and development, and...
- Maintain a culture of innovation.
MOON looks to track something called the S&P Kensho Moonshots Index.
The S&P Kensho Moonshots Index holds mid-cap and small cap companies engaged in one of 17 "moonshot" technologies, such as autonomous vehicles, clean technology, genetic engineering, cybersecurity and others.
This index measures the performance of 50 U.S.-listed companies with the highest Early-Stage Composite Innovation Score.
What the heck is that?
According to ETF Trends, the Early-Stage Composite Innovation Score is "the combination of the resources a company allocates to innovation and the degree to which the company stresses an innovative culture and mission, as indicated by the Innovation Sentiment Score."
"The Innovation Sentiment Score reflects the density of innovation-related words and phrases in the company’s latest annual filing."
Here are some of MOON's key holdings.
Again, this ETF has only been open for business since Thursday.
It's thinly traded. So far just 192,100 shares have changed hands. That's why I wouldn't recommend you buy into this right away.
And it doesn't trade options at this time.
But the technologies it focuses on -- genetic engineering... driverless cars... etc. promise to be more than just "the technologies of the future".
This technologies (and others) actually ARE the future. One or more could be the FAANG stocks of tomorrow.
Which ones? Time will tell.
Let's keep an eye on MOON as we move into and through 2021.
Have a great week,
Editor-in-Chief, True Market Insiders