The Russell 2000 small-cap index is down 15% from its all-time high in May 2007. What's the small-cap trade if the U.S. is headed for a recession?
Going into a recession, I recommend being long the big-caps, says Karen Finerman. They’re a much more defensive place to hide than the small-caps.
Here’s why - in a recession liquidity dries up - liquidity in the stock and in the financing markets, she says. It’s probably going to get a lot harder for small companies to get cash.
I think the trade is - long SPDR Trust (SPY) short iShares Russell 2000 Index against that, dollar for dollar, Finerman says.
I like that trade, concurs Guy Adami.