In August 2018 and September 2018, we introduced investors to the concept of “Micro-Bubbles”. These small groups of stocks pose extraordinary risk within an overall market that is not nearly as overvalued. We deemed these stocks as overvalued because their valuations assumed they would take significant market share away from the highly profitable incumbents in their industries. As seen in Figure 1, six of the seven micro-bubble stocks have underperformed the S&P 500 (outperformed as shorts) since our original reports.
Figure 1: All Seven Micro-Bubble Picks Outperform as Shorts
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