What the experts say
Small caps remain in purgatory
Small-cap stocks are underperforming larger peers by the widest margin in more than 20 years, said George Steer in the Financial Times. Since the beginning of 2020, “the Russell 2000 index has risen 24 percent, lagging behind the S&P 500’s more than 60 percent gain over the same period.” The unusually wide spread—the largest since the late 1990s—comes partly from “a steep rise in borrowing costs,” which has disproportionately hurt smaller companies. Earnings in the fourth quarter for Russell 2000 companies were down 17.6 percent year over year. “Earnings for S&P companies, in contrast, rose by about 4 percent, although a large portion of the gain was driven by the so-called Magnificent Seven large tech stocks.” A small-cap rally did “gather pace in the final months of 2023,” but has “petered out.”
Robinhood’s attractive credit card
Brokerage app Robinhood’s new credit card is offering 3 percent cash back on every purchase, said Evan Zimmer in CNET. The perks of the Robinhood Gold Card are “pretty impressive.” That 3 percent cash-back rate on everything you buy “is practically unheard of”; the money gets deposited to your Robinhood brokerage account. There are also “numerous shopping and travel protections” and no foreign transaction fee. Plus for those who care about such things, “it’s a metal, gold-plated credit card.” What’s the catch? Not much. To get it, you have to join Robinhood’s Gold service, which adds features to the free stock-trading app, via a subscription costing $5 per month or $50 annually.
Puerto Rico tax breaks lure transplants
“Financial incentives” have made Puerto Rico a destination for Americans looking to relocate, said Cork Gaines in Business Insider. “Between 2021 and 2022, about 27,000 individuals moved from the U.S. mainland to Puerto Rico.” A big reason is Act 60, a 2019 bill loaded with benefits for American businesses and investors. Those who receive an Act 60 tax exemption get “a 4 percent income tax rate, a 75 percent discount on property tax, and no tax on capital gains accrued while on the island.” Recipients do have to “give $10,000 annually to specific Puerto Rico–based charities and purchase a residence on the island within two years of relocating.” The influx of wealthy Americans has contributed to a 28 percent increase in the price of a single-family home there since 2019.