Small-Cap Momentum Portfolio - 4/13/2026

The Small-cap Momentum Portfolio delivers very high long-term returns but with significant volatility. These stocks are undervalued and very small. They'll trade erratically in large chunks, both up and down. This isn't suitable for everyone by any stretch.

It’s about hyperaccumulation. (To skip right to the portfolio, click here.)

We'll be ruthless about managing this portfolio with monthly rebalancing on the 15th of every month. If it's not in the model, it's eliminated. If it's in the model, it stays. We don't care about individual businesses or other factors.

The model is quantitative in nature and we won't argue with it. For instance, I hate Bitcoin, yet the portfolio included a Bitcoin company when I first created it.

This portfolio can include everything from Bitcoin to brake bands and pretty much everything in between, all in equal dollar amounts. We're not playing favorites with any of them. It's a 25-stock portfolio.

You can do this with a few hundred bucks in each stock. You don't have to have a gazillion dollars. However, you do have to stick with the rules.

Don't play favorites.

Do not play “It's going to come back”. If we come in here and the model says sell the stock that's down 20%, we're out.

We're gone. Sell it. Don't argue with it.

25 stocks. Do the math. That's a max 4% position of the funds that you choose to keep in this portfolio. If you were to say, I'm going to put $10,000 in this, that's $400 bucks a stock. Don't exceed that.

Even if you think you like this company more than that company—no. The model doesn't care what you like.

The model doesn't want to know what you like. Don't try to tweak it. Don't try to perfect it.

Play by the rules.

The returns can be very high.

This portfolio is one where, when we get to certain points, I'm going to come out and say, you probably want to hedge here. I'll give you two choices. There's an ETF hedge that you can use, and here's an options hedge that you can use.

When we're at a point where it makes sense to consider hedging off a little bit of the risk, we'll do that.

We're not there. That's why I'm not giving you a suggested position.

For a deeper look at the Small-Cap Momentum strategy, including how it beat the market 16 out of the last 20 years, I’ve recorded this for you:

Here’s the Small-Cap Momentum portfolio, updated as of 4/13/2026: