Bill Baruch Trims Small Cap ETF Position for Rebalancing and Cash

Market Turn and Small Cap Performance

• 📈 The market has seen a nice turn today, with the Dow and S&P positive, while the NASDAQ is in the red.
• 🚀 The Russell is leading the market, hitting a new all-time high and up almost 4% year-to-date, outperforming mega-caps and NASDAQ.
• 💡 The early year story has been the performance of small caps, financials, and industrials, rather than mega-caps.

Trimming the IJR ETF

• 🎯 Bill Baruch is trimming his position in the IJR, a concentrated small-cap ETF, as a rebalancing move.
• 💰 This action is raising cash, moving the holding from nearly 5% to around 4.25%.
• ⚠️ The move is partly due to a seasonal lull in mid-January and upcoming news on jobs and Supreme Court rulings.
• 📊 Baruch aims to raise cash to have flexibility, especially if the market experiences a downturn.

IJR vs. IWM and Market Outlook

• 🔍 While the IWM has accelerated and outperformed the IJR recently, the IJR has outperformed the IWM over the last five years.
• 💡 Baruch is looking for a breakout in the IJR, but notes that the IWM is cleaner for a breakout, driven by materials and biotechs.
• 🏦 The IJR has a better balance sheet than the IWM, which includes more non-profitable biotech and tech companies.

Market Complexity and Investor Strategy

• ✨ The current market rotation and broadening out are seen positively, with reasonability returning.
• 🧠 The article "Odds are changing. 2026 is a market for investors, not gamblers" suggests a need for due diligence and focus on valuations this year.
• 📊 Investors need to understand the difference between indexes like the Russell 2000 (more speculative) and the S&P SmallCap 600 (more profitable companies).

Shifting Market Dynamics

• 🚀 The outperformance of MAG7 stocks peaked over a year ago, and 2025 was a mixed year for them.
• 💡 The current rally, building since September/October, is driven by investors realizing there are "other games in town" beyond tech giants.
• 📊 With every sector positive except tech today, it highlights a broader market participation and a shift in investor focus.