Active managers haven't done much to boost their cause in recent years which explains why many friends of mine who run funds have had a difficult time raising money. With that stated there are some fund managers namely Peter Bortel of Bortel Asset Mgmt and Tyson Halsey of Income Growth Advisors who have performed very well. Just 19 percent of Active managers beat the large-cap Russell 1000 in 2016, according to Bank of America Merrill Lynch, giving further fuel to the exodus. All the money flowing toward indexing, though, has generated some critics who believe passive investors are ignoring risks. Passive investing offers fewer opportunities to generate "alpha," or the ability to beat benchmarks, and offers little downside protection. When the market falls, investors tracking indexes can lose money unless they're properly diversified. The most significant effect of money moving towards passive funds is that micro cap stocks have few ETF's and as such, MASSIVE disparities in fair value versus current value exist in the microcap segment of equities making me downright giddy but cause pain to microcap companies given they are so undervalued. Eventually there will be a number of microcap ETF's and when they are created in the coming years, liquidity should increase significantly for the microcap segment of equities. The companies we highlight in our newsletters and in some cases invest in, should theoretically increase in value given the ability to access these stocks via these newly formed ETF's. The ETF's will buy these stocks as they will be part of the index the ETF's will create.  These newly formed ETF's should increase the liquidity or average daily trading volume of microcap companies included in these ETF's. There are currently 7 microcap ETF's I am aware of and given the popularity of ETF's many more are likely being created.

My view of equities based on the macroeconomic environment remains unchanged. I am still bullish and despite some early setbacks, it looks like President Trump's economic stimulus measures will kick in next year and as such the equities market is buying now in preparation for that stimulus. It looks like the Fed will likely make 2 more rate hikes this year, one in June and one in December. Lastly, my dear friend volatility (I trade options so I need volatility) should be making a comeback given war drums are suddenly getting louder. Expect some wild swings through the Spring and Summer given weapons the size of my house are being dropped from airplanes on our "enemies". I hate war but war is great for the equity market. For those of you who hunt or own a weapon(s) you can understand how much war will cost given the price of ammo and the price of weapons has skyrocketed in recent years. I was at a local gun show a few weeks ago and my jaw hit the floor when I was told how much just a basic semi-auto handgun now costs and the ammo costs seem to increase by the second, good grief.

I haven't figured out a good title for this section. My Dad wants Ross's Rants but I feel like I sound like a crazy person ranting. If you have ideas on what to title this section, please let us know, info@sylvacap.com. If I select a title from a reader that reader will win an all inclusive, fully paid for thank you from your's truly :). I will be in Washington DC next week to Chair the Pitch & Partner Session of the World Orphan Drug Congress, I was invited to Chair this event again of which I am thankful. I have been researching and following the orphan or rare disease space (affects less than 100K people annually) for a little over a decade. Soligenix (Nasdaq: SNGX) was invited to attend the conference and it will be interesting to learn what the business development heavyweights have to say about Soligenix upon hearing their presentation next week, Soligenix presents on Friday the 21st. Soligenix is an investment of mine and they offer one of the most compelling risk/reward profiles in biotech, RepliCel (U.S. ticker: REPCF or Canada, RP-V) is another that falls into that category. I can tell you that despite the lofty cost to attend the event, these companies will present to a full house. If any of you are interested in my real time feedback, check our twitter account: https://twitter.com/SylvaCap?lang=en, I will be posting some thoughts there and if I forget to provide my feedback, don't hesitate to email us at info@sylvacap.com.

I usually am giddy about the Kentucky Derby this time of year and my Derby thoughts are always a favorite for many of you readers who are also avid horse players. I have absolutely no clue who wins the Derby this year and am thanking my lucky stars for betting on "ALL" in the Kentucky Derby Futures Pool #2. I mean the second I start thinking someone is a horse that can be trusted, they run and are nowhere to be found at the finish. Classic Empire seems to be the standout of the crop but he hasn't raced since finishing 30,000th in his last race and my guess is he will need the Arkansas Derby this weekend and if he finishes third or better, I will pay more attention to him after the race. Gormley will likely be the "wise guy" horse of the Derby after winning the Santa Anita Derby, but he is also a Jekyl and Hyde type, no clue what we are getting there. The days before the Derby I am sure I will have a better idea of who I will be backing but as of now, "ALL".

Happy holidays!