Learning how to invest may be a cheat code for everybody, regardless of their financial status. While it may be harder for others to start, everybody is starting from ground zero when it comes to knowing how, where, and when to invest. This year, the stock market has been on a rollercoaster, but it is becoming less volatile, with stocks advancing fairly steadily to new highs in September.
Simultaneously, the artificial intelligence fever that has driven stocks to record levels lately is cooling down. Still, the S&P 500 is up 8.7 percent year to date by market price as of Aug. 20, a slight advance from late July.
Small U.S. stocks have churned out a return slightly higher than one from established companies in the past three months. An interest rate cut should benefit return of dividends from smaller companies in a couple of ways, says Seth Merrill, chief investment officer and partner at Crewe Advisors in Salt Lake City.
“First, on average, small caps carry more overall debt than large caps,” he says. Any reduction in rates could give a larger and faster boost to small-cap profitability.
“Second, a rate cut disproportionately benefits small caps since they are more likely to be loss-making than large caps,” Merrill adds. “A large percentage of small-cap biotech and tech companies, for example, have negative cash flow today.”
Companies not expected to turn a profit for a long time are more sensitive to changes in interest rates, which can push their stock prices up or down.
The artificial intelligence sector has been a key driver of stock gains in 2024 and 2025, led by prominent names such as Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), Palantir Technologies Inc. (PLTR), and Taiwan Semiconductor Manufacturing Co., Ltd. (TSM).
But is the bloom off the rose? AI stocks tumbled on Aug. 19 and 20 after researchers at the Massachusetts Institute of Technology published a report that found the vast majority of AI projects failed despite large sums of money invested.
The report was scathing. In interviews, enterprise users reported consistently positive experiences with consumer-grade tools like ChatGPT and Copilot. These systems were praised for flexibility, familiarity, and immediate utility,” MIT researchers wrote.
Yet, they added, the same enterprise users “were overwhelmingly skeptical of custom or vendor-pitched AI tools, describing them as brittle, overengineered or misaligned with actual workflows.”
AI can be used to help with scaling and predicting the market, and where to place investments. It is a tool that has to be incorporated into your long-term investment plan.
