Tony Stark is a wunderkind... a playboy... a natural-born leader...
And an investor's worst nightmare.
Stark – who was played by Robert Downey Jr. in Marvel's "Avengers" franchise – started his superhero journey after surviving a terrorist attack of his own unwitting creation.
Stuck in a remote cave with shrapnel inching its way toward his heart, he invented a prototype of the Iron Man suit.
He then blasted his way to freedom... returned home... and had an existential crisis about his weapons empire, Stark Industries. (It's like the superhero-movie version of Lockheed Martin or Northrop Grumman.)
Iron Man is a fun superhero to watch. But as an investor, it's hard to imagine a worse place to put your money than Stark Industries.
Consider what happens in just the first "Iron Man" movie...
Over the course of his self-discovery journey, Stark...
- Skips an awards dinner with some of his most important defense clients, hurting potential future revenue
- Ignores safety precautions on a trip to demonstrate his weapons technology
- Breaks several U.S. laws and becomes a war criminal by waging extrajudicial killings in a war zone
- Goes into literal battle with his company's CEO when they disagree on business strategy
- Hides the existence of valuable intellectual property from his company and shareholders, distorting the value of the stock
- And shuts down his company's largest, most lucrative division on a whim... likely crushing earnings for some time thereafter
Stark's "getting religion" moment sounds cool in the context of a superhero movie.
But as an investor... you'd have to take some heartburn medicine and contact the best shareholder-rights lawyer you know.
It's a lot of fun to poke fun at the Avengers' financier and his questionable business tactics...
It's a lot less fun to live your own version of a Stark Industries investing disaster.
Regular readers know we've been closely covering the upcoming Russell 2000 "reconstitution day." On June 26, the small-cap index will update its listings... adding and deleting hundreds of stocks in a single day.
The upside starts much earlier, though, on "rank day" – when the preliminary lists are released on April 30.
If you've been keeping up with our research, you already know that getting added to the Russell can mean huge upside for these tiny stocks.
But there's another side of the rebalancing coin...
Institutional investors have to buy new Russell additions in order to track the index...
They also have to sell any Russell deletions for the same reason.
In the past six years, the median company bounced out of the Russell 2000 has significantly underperformed the index in the two months leading up to reconstitution day.
If you're holding shares of those businesses, you might soon find yourself in the red... with very little you can do about it.
My team and I have been scoping out the stocks we believe could soon get dropped from the Russell. We've put together a list of our top five "money traps" to steer clear of.
But with "rank day" just three days away, you're running out of time to get your portfolio in order. Get the full details here.
The only thing more important than the stocks you own are the stocks you don't.
Keep a close eye on your holdings in the coming weeks... so you don't end up on the wrong side of a movie plot.
Regards,
Joel Litman
April 27, 2026
