The Illusion of Safety in Small Caps The Russell 2000 is marketed as the premier gateway to American small-cap stocks. It’s embedded in retirement accounts, ETFs, and target-date funds. Fund managers treat it as gospel. But peel back the layers, and you’ll find a model so flawed, so recklessly structured, that it has become a systemic risk masquerading as a growth vehicle. Small caps are supposed to be the nimble, high-potential engines of American enterprise. But when 42% of them are bleeding money, the narrative begins to crack—and what’s left is a financial illusion engineered for complacency, not performance. The Deception Behind the Numbers Wall Street proudly displays the Russell 2000’s price-to-earnings (P/E) ratio at a seemingly reasonable 19. But…
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