{"id":92217,"date":"2016-07-01T06:48:53","date_gmt":"2016-07-01T10:48:53","guid":{"rendered":"http:\/\/countingpips.com\/?p=92217"},"modified":"2016-07-01T06:48:53","modified_gmt":"2016-07-01T10:48:53","slug":"think-small-for-big-profits-post-brexit","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/07\/think-small-for-big-profits-post-brexit\/","title":{"rendered":"Think Small for Big Profits Post-Brexit"},"content":{"rendered":"
July 1, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Think<\/p>\n

For stocks around the world, the struggle is real.<\/p>\n

On the heels of the pivotal Brexit vote last week, over $3 trillion dollars of wealth evaporated from the markets.<\/p>\n

This week, the S&P 500 Index fell below its 200-day moving average and touched 2,000 for the first time since March.<\/p>\n

Overseas, the UK blue-chip index \u2013 FTSE 100 Index \u2013 fell 3%, and the European STOXX 600 Index plunged by 11%.<\/p>\n

The downward moves have been brutal, and chart analyses of the major indexes suggest that the bleeding isn\u2019t over yet.<\/p>

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But if European stocks continue their plunge into the abyss, this segment of the stock market could rise through the end of the year\u2026<\/p>\n

Home is Where the Profit Is<\/h2>\n

Investors love large-cap stocks for their dividends, relatively low volatility, and ample liquidity.<\/p>\n

But these stocks have one glaring weakness that has been brutally exposed this month: international exposure.<\/p>\n

According to FactSet, S&P 500 firms that generate 50% or more of their sales outside the U.S. will report at least a 9% decline in earnings in the second quarter.<\/p>\n

And those figures were reported before<\/em> the pound took an 11% header last week.<\/p>\n

As you may know, when the dollar strengthens, profits earned overseas by US companies get pinched.<\/p>\n

For one, sales generated in a foreign currency convert into fewer dollars.<\/p>\n

And foreign demand often weakens for goods priced in dollars, as they become more expensive for consumers. On the other hand, domestically-focused stocks are looking a whole lot sweeter\u2026<\/p>\n

Go Small and Stand Tall<\/h2>\n

The earnings of large-cap companies that book 50% or more of their revenue in the US are expected to drop just 2.8%.<\/p>\n

And while large-caps have taken a big hit, small-cap issues have held up better than their larger counterparts.<\/p>\n

Since the start of the year, the S&P SmallCap 600 Index has gained 1.2%, versus a 0.4% decline in the S&P 500 Index.<\/p>\n

And in the month period ahead of the referendum vote, the small-cap index surged 5% as the \u201csmart money\u201d positioned for a possible \u201cLeave\u201d vote. Large-caps gained just 2% over the same period.<\/p>\n

As you can imagine, the companies with the greatest international exposure will suffer the most in this environment.<\/p>\n

But small-caps generate the majority of their profits here in the US, and are largely insulated from these currency effects.<\/p>\n

This makes them the perfect target for investors looking to reduce their foreign exposure.<\/p>\n

And as we approach the halfway point of the year, now could be the best time to scoop up small-cap shares\u2026<\/p>\n

Over the next few weeks, I\u2019ll cover some of the tastiest small-cap opportunities, best shielded from the chaos across the pond.<\/p>\n

Stay tuned.<\/p>\n

On the hunt,<\/p>\n

Jonathan Rodriguez<\/p>\n

The post Think Small for Big Profits Post-Brexit<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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By WallStreetDaily.com For stocks around the world, the struggle is real. On the heels of the pivotal Brexit vote last week, over $3 trillion dollars of wealth evaporated from the markets. This week, the S&P 500 Index fell below its 200-day moving average and touched 2,000 for the first time since March. Overseas, the UK […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-92217","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/92217","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=92217"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/92217\/revisions"}],"predecessor-version":[{"id":92242,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/92217\/revisions\/92242"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=92217"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=92217"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=92217"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}