New Trade for August 19th 2020

Big Cap Tech led the way again yesterday as the S&P reached all time highs.  Since the March 23rd bottom the S&P has rallied a dazzling 51% to $3,389.78.  Apple, Amazon, Facebook and Microsoft make up nearly 20% of the entire S&P and have contributed generously to the recovery. Where will it go from here?  Only time will tell.  

Major indices are flat ahead of today’s opening bell with the Nasdaq down and the Dow and S&P up slightly.  

Minutes from the July Federal Reserve’s Open Market Committee meeting will be released at 2 p.m. ET today.  They could provide some new information about inflation targeting from the central bank.  The market at present seems to be pricing in a recovery fueled by the central bank which has deployed unprecedented levels of monetary stimulus to keep markets functioning. 

Some analysts are suggesting that investors should focus on out-of-favor small and midcap stocks with more recovery upside.  Our research team has one suggestion for investors seeking a midcap position with less risk and less hassle.

The Vanguard Mid-cap ETF (VO)

  • Seeks to track the performance of the CRSP US Mid Cap Index, which measures the investment return of mid-capitalization stocks.
  • Provides a convenient way to match the performance of a diversified group of medium-sized companies.
  • Follows a passively managed, full-replication management approach.  

The CRSP US Mid Cap Index is a broadly diversified index of stocks of mid-sized U.S. companies with solid balance sheets, in businesses that are not structurally damaged.  For investors looking to get into mid cap stocks without taking on the risk of an individual equity, the VO ETF offers a simple solution.