Druckenmiller swapped out shares of Nvidia with shares in the iShares Russell 2000 ETF valued at $700 million. He expects smaller companies to outperform based on valuation gaps. Smart investors see the overlooked cheap small companies as an opportunity.
Valuations show S&P 500 has a forward P/E ratio of about 22, while S&P SmallCap 600 is at about 15, making small-cap stocks over 30% cheaper. Druckenmiller's move towards small-cap stocks indicates exploiting this valuation opportunity.
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