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2020.05.17 Penn Wealth Report Vol 8 Issue 03

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Penn Wealth Publishing Subscription Information https://www.pennwealthreport.com Penn Wealth Publishing 9393 West 110th Street 51 Corporate Woods Suite 500 Overland Park, KS 66210 4 penn wealth Report voluMe 8 issue 03 17 May 2020 Penn Wealth Report Copyright 2020. All Rights Reserved. From the Editor/ It can be said that humans, historically, have short memories. It can also be said that large groups of people tend to make the same mistake, over and over again. at is why we have to chuckle when we hear the tired and worn media phrase of the year, "new normal." For the most part, our post-pandemic lives will go back to being what they were as we entered into 2020. Sure, there will be some government-mandated changes similar in nature to the ones made after 9/11, but things will pretty much return to normal. We believe there will be one glaring exception to that statement, however. For three decades, America has enabled China. e country which unabashedly claims that it will rule the economic world within five years ("Made in China 2025") has been built on the back of US consumers while politicians turned a blind eye. e simpletons in the media simply accept China's continued growth trajectory as a given, but that growth rate is simply unsustain- able. And that was before the country introduced the world to COVID-19. At an ever-increasing rate, Americans are looking at the source of the items they buy and they are avoiding the "Made in China" logo. e same companies which tripped over themselves to build factories in China are now looking elsewhere—to India, to Indonesia, to Vietnam, to Malaysia, to (dare we say) the US. We don't need to come up with a catchy slogan like "Remember the Alamo" to sustain this movement—it is a giant boulder moving down a mountain. So, how can we best take advantage of it? A lot of companies will feel the pain due to America's decou- pling from China, but there is a group which will largely be immune. Historically, small companies—those under $2 bil- lion in size—have outperformed their larger counterparts. Take a look at the graph, however, which shows that both growth and value small-caps actually have negative returns for a 3-year period. Not only will a reversion to the mean spell fat growth for this group, these companies also tend to be little affected by China—their revenues tend to be generated locally. is month we are adding a stellar small-cap ETF, the iShares Russell 2000 Growth ETF (IWO $183), to the Dynamic Growth Strategy—our ETF portfolio. With names like Teladoc (TDOC), Chegg (CHGG), Regeneron (REGN), and Generac (GNRC) as top holdings, we are expecting strong returns from this investment. As for the decoupling: let's roll. —MSH Michael S. Hazell editor-in-chief Opportunity in the US Decoupling from China Decoupling from China, vastly reducing our dependence upon that nation for cheap goods, won't be easy, but it has become necessary. ere is a hidden investment opportunity in that strategy.

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