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IN THIS ISSUE: Small-cap stocks, prediction markets, and a doctor’s note |
THE HEADLINES
Small talkWhat’s happening: Small-cap stocks have been gaining momentum, says Jennifer Fo Cardillo, portfolio manager at Fidelity. Small-cap stocks typically represent companies with market capitalizations—the total value of all outstanding shares—ranging from $300 million to roughly $10 billion.
Here’s why: COVID-19-era supply-and-demand issues have normalized, which has helped support these smaller companies’ earnings growth, says Fo Cardillo. The US government’s renewed focus to move operations back to the US may also be helping, since over 90% of small caps are domestic. Small caps have been further bolstered by the tax cuts in the sweeping tax law passed last year, says Fo Cardillo.
What it means for you: You may think about adding small caps to your portfolio if it makes sense with your goals and savings timeline. Fidelity believes it’s smart to diversify across stocks by market capitalization (small, mid, and large caps), sectors, and geography. Not all caps, sectors, and regions have prospered at the same time, or to the same degree, so you may be able to reduce portfolio risk by spreading your assets across different parts of the stock market.
Still, there are drawbacks: Smaller, younger businesses may not yet be generating income or may not be able to compete long term with larger firms. Also, small-cap stocks are more sensitive to interest rates than large caps. So if the Fed raises rates, smaller companies may struggle to afford to borrow money to grow.
Interested in small caps? You might check out the Russell 2000, a stock market index that tracks the value of approximately 2,000 US stocks with a small market capitalization. While you can’t invest directly in an index like the Russell 2000, here are 3 ways to invest in small caps in the index. |
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Flow stateWhat’s happening: Active exchange-traded funds (ETFs)—bundles of individual investments managed in an attempt to beat a benchmark—have hauled in a record-setting $350 billion in flows so far in 2026. (Psst … “flow” measures investment dollars moving in or out during a set time.)
Here’s why: Over 700 new ETFs hit the market this year, with about 80% of those being active ETFs.1,2 Investors may like active ETFs because they typically cost less and can be more tax-efficient than actively managed mutual funds. They may also offer potentially higher returns than passively managed funds because portfolio managers’ and research analysts’ investment decisions could help them outperform benchmarks. Still, they could have higher fees than passively managed funds, which could result in lower returns depending on performance.
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| What it means for you: ETF flows can be a useful tool for investors to help identify market trends, and to see where other investors are broadly putting their money. Learn
more about ETFs and how they might fit into your portfolio. Then check out Fidelity’s powerful ETF screener, which lets you target and compare ETFs to help generate ideas aligned with your objectives. |
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Down to businessWhat happened: Between 2020 and 2030 the labor market is only expected to expand by about 9 million workers—the lowest since the decade-long span ending in 1960, according to an analysis of Census Bureau data and Congressional Budget Office estimates.3 Between 2030 and 2040, the workforce is forecast to shrink by about 2 million people.
Here’s why: Baby Boomers retiring at high rates, stricter immigration policy, and Americans having fewer children. In fact, the US birth rate has declined by more than 20% since 2007.4
What it means for you: A contracting labor force could potentially boost workers’ bargaining power—and wages. The flipside: Fewer workers could mean fewer contributions to Social Security. That could lower older generations’ benefits, unless the government steps in. If you’re worried about Social Security cuts, you could make these 4 moves now to shore up more income for later. |
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WHAT COULD THESE MEAN FOR YOUR INVESTMENTS? |
HOW TO
Find an AI-resistant jobThese roles are less at risk of being replaced by AI in the near future—and could pay over $100,000. |
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WORTH A TRY?
Get a checkupConsider booking health checkups now and going before the end of the year. That way, if you’ve met your insurance plan’s deductible, you can pay less for services before the January reset. Check your employer benefits too. You may be eligible for nutritional coaching, gym membership reimbursement, or even free mental health services you might want to take advantage of before the end of the year. And
slash your health care spending in these 10 ways now. |
