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Register for a free website account above and we will send you periodic discounts and other offers to our research, books and Inner Circle membership as well as exclusive perks not available elsewhere.
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Market Snapshot – Heading Into the Week of Nov 17, 2025
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Equities: Major U.S. indexes had a sharp selloff on Thursday (Nov 13) led by tech, with the Dow dropping ~800 points after hitting a record above 48,000; futures have since stabilized, with a slightly positive bias after “worst day in over a month.” Investopedia
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Rates & Fed: Global equities and bonds remain under pressure as hopes for additional Fed cuts fade. Several Fed officials (Hammack, other hawks) are arguing against a December cut, even after two cuts earlier this year. Others (Miran, more dovish) say policy is still too tight and data are distorted by the shutdown and housing lags. Reuters
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Dollar & Shutdown Aftermath: The dollar has softened versus euro/yen after the U.S. government reopened, with markets now waiting for fresh data to gauge the true state of the economy and trust in U.S. assets post-shutdown. Reuters
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Week-Ahead Data: A heavy calendar of U.S. releases is coming (jobs, inflation, energy inventories, etc.), which will drive FX, bonds, commodities, and risk sentiment starting Monday. S&P Global
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Valuations & Positioning:
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Small-cap U.S. stocks trade at about a 16% discount to Morningstar fair value, vs. large-caps closer to fair or rich. Morningstar
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Emerging-market and carry trades (especially LatAm FX, some African and Asian risk) are flagged as crowded and vulnerable to a volatility spike. Bloomberg
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Dividend Landscape: Multiple outlets are highlighting high-quality dividend names (Realty Income, PepsiCo, Verizon, Prudential, Host Hotels & Resorts, and select global names) as core building blocks for income in a choppy rate environment. Yahoo Finance
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Small-cap U.S. stocks trade at about a 16% discount to Morningstar fair value
There is a lot of chatter about the overvalued market and the AI stocks possibly be in a bubble. In fact, this Friday I was a panelist on a podcast and we discussed precisely this topic (I will send out a link to the podcast when it is live). I do believe that there is a bubble in the AI stocks and at some point the astronomical AI spending that we see today will fail to generate the returns we expect. That will be a "falling off the cliff: moment.
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Very reminiscent of the internet bubble 25 years ago.
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It worries me a great deal that the S&P 500 is about a third Mag 7. If you are one of the "VOO and chill" index fund investor, the facade of safety through diversification is likely to be shattered soon. When the AI bubble pops, all the large cap indexes are exposed. If you insist on S&P 500, atleast go for a fund that equal weights all stocks (such as RSP).
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Where should You Invest Now?
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Small caps are at 16% discount to the fair value according to Morningstar's calculations.
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Small cap value is at 25% discount to the fair value.
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This is pretty close to the recommended margin of safety of 30%, if you are a classical value investor. If you start digging in the small cap value world, you will find great many opportunities today.
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The picture above shows where you should position your portfolio today and it is quite clear that the Small Cap Value is the place to be.
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Inner Circle Portfolio Performance
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The portfolio performance is updated once a month, and tracked YTD until the end of the prior month. Performance is tracked as time weighted total return.
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Upgrade to Inner Circle
- My actual Small Cap Value portfolio with highly profitable but under followed stocks and Kelly Criterion optimized weights
- Detailed investment thesis for portfolio stocks, including target prices and expected returns emailed to you as soon as published
- 1 year membership with NO auto-renewal. Repurchase membership again if you wish to continue for another year once your term completes.
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Shannon's Demon Explained: Why Rebalancing Beats Buy-and-Hold Over Time
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I want to tell you about one of the most counterintuitive ideas in all of investing, an idea so strange that when I first encountered it, I spent about an hour with a spreadsheet trying to convince myself it was wrong before I finally accepted that it was right. It is called Shannon's Demon. And once you understand it, you …
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Full Kelly vs. Fractional Kelly: Which Position Sizing Approach Is Right for You?
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Most investors spend enormous effort deciding which stocks to buy and almost no effort deciding how much to buy. That is exactly backwards. In the long run, position sizing will have as much impact on your returns as stock selection and it will have more impact on your survival as an investor. I use the Kelly Criterion as the mathematical …
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My Deep Value Stock Screening Process: From 3,000 Stocks to a Short List of 5
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There are roughly 3,000 publicly traded US companies with a market capitalization under $2 billion. Most of them are not worth your time. A small number of them are great values hiding in plain sight. Genuinely cheap, financially strengthening businesses that the market has overlooked, misunderstood, or written off prematurely. The challenge is finding them without spending your entire life …
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