Here’s how this works…
Each week, we will introduce you to one new investing term that you’ll need to know if you want to start investing.
Then we’ll provide a summary of the past week’s financial news and explain why it’s relevant to you as a beginner investor and, more importantly, how you can use this knowledge to your advantage.
So, let’s get cracking!
TERM TO LEARN
THE MAIN DIFFERENCE BETWEEN ACTIVE AND PASSIVE INVESTING IS THAT ACTIVE INVESTING INVOLVES FREQUENT TRADING IN AN ATTEMPT TO OUTPERFORM THE STOCK MARKET. PASSIVE INVESTING USES A BUY-AND-HOLD STRATEGY TO TRACK THE PERFORMANCE OF THE MARKET.
Key differences:
Management approach:
Active - frequent portfolio adjustments based on market conditions.
Passive - buy-and-hold strategy with minimal trading.
Risk and return:
Active - attempts to manage risk and generate higher returns.
Passive - accepts market risks and returns.
Flexibility:
Active - can adapt to market conditions and pursue various strategies.
Passive - limited to tracking specific indices.
Tax efficiency:
Active - potentially less tax-efficient due to more frequent trading.
Passive - generally more tax-efficient due to lower turnover.
INVESTMENT NEWS FOR BEGINNERS
Novo Nordisk shares plunge after Alzheimer’s drug trial fails to hit key target.
Norvo Nordisk shares fell sharply after its major Alzheimer's drug trial failed to meet the main target. The company announced that its oral semaglutide medication, tested in two large studies involving thousands of patients, did not significantly slow cognitive decline in people with Alzheimer’s disease. This news immediately led to a 10% drop in the company’s share price as investor hopes for a new successful Alzheimer’s treatment were disappointed.
Why this matters to you…
This is a perfect example of the dangers of "picking stocks." If you had 20% of your money in this one company, you would have lost a significant amount overnight.
Pharmaceutical stocks can be highly volatile. Positive or negative news about drug trials can make share prices rise or fall dramatically in a short period.
What you need to do…
Before buying a specific company, understand why it is making money. If its future relies on a product that doesn't exist yet (like a trial drug), it is a risky bet.
Understand the company’s other strengths. In Novo Nordisk’s case, it remains strong in obesity and diabetes drugs, so one failed trial does not mean the company is doomed, but it could affect growth expectations.
Consider long-term potential. Some drugs fail, but others succeed. Look for companies with a broad pipeline and solid financial position.
Global volatility and inflation still above targets.
Global stock markets have seen another week of ups and downs, with many indexes finishing lower as investors worry about inflation and how many more interest-rate cuts are realistic. Some central bank members are now more cautious about cutting rates too quickly because inflation is still above their official targets.
Why this matters to you…
Volatile weeks are common and can happen even when the long-term trend is still upward. This is part of the “price” of higher potential returns from shares.
Central banks are trying to balance inflation and growth affects bond yields, mortgage costs, and stock valuations. Which affects your portfolio’s performance.
Understanding that inflation is still an issue helps explain why cash alone may not protect your purchasing power over many years.
What you need to do…
As a beginner, decide in advance how much volatility you can tolerate and choose funds (for example, mixed-asset or multi-asset funds) that match that comfort level.
Consider holding a mix of assets. Cash for short-term needs, bonds for some stability, and equities for growth, rather than relying on a single type.
Use weeks of bad news as learning opportunities. Note how markets react, but stick to your long-term plan instead of trying to jump in and out.
Autumn budget 2025: How it could affect interest rates, inflation and the financial markets.
The decisions made in the UK Autumn Budget could influence the country’s interest rates, inflation, and stock markets. The Budget may include changes to taxes on property, capital gains, and possibly everyday goods. If the Budget focuses on saving money rather than spending or “giveaways,” it could make it cheaper to borrow money over time (lower interest rates) and help bring down price rises (inflation). However, if the Budget increases certain taxes (like VAT or fuel duty), it could make things more expensive, possibly stopping interest rates from dropping soon. The Budget’s overall direction will impact how confident investors feel about UK assets like stocks, government bonds, the pound, and property.
Why this matters to you…
The UK stock market is split. The FTSE 100 (the biggest 100 companies) makes most of its money abroad, so it is less affected by UK taxes. However, the FTSE 250 (the medium-sized companies) relies more on the UK economy. If the budget is harsh on UK businesses or consumers, medium-sized UK company shares might dip in value.
Government bonds, also known as “gilts” and the pound might react quickly to Budget decisions, impacting returns for UK-based investments.
What you need to do…
Don’t panic sell. Market jitters before a budget are normal. A "relief rally" often happens after the news is out, simply because the uncertainty is over.
The FTSE 100 is less sensitive to domestic policy, so this is a practical lesson in diversification. Holding investments that make money globally (like a global index fund) protects you from UK-specific tax changes.
Thanks for reading this 12th edition.
Well, the stock market has taken us on a bit of a wild rollercoaster ride this past week. Investors got a little spooked as the AI hype around big names like Nvidia hit a reality check, mixed with some jittery jobs data and crypto wobbling under pressure.
It’s like the market suddenly remembered that even the coolest tech can have its off days and threw a mini tantrum while digesting it all.
But hey, pullbacks like this are part of the normal market dance. So, instead of reaching for the panic button, think of this as the market's way of catching its breath before the next sprint.
Keep calm, diversify, and remember: patience is the investor’s best friend. After all, those who stayed steady through past bumps often ended up laughing all the way to the bank (or at least to the next uptrend).
See you next week!