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
THERE ARE SEVERAL TYPES OF STOCKS THAT INVESTORS CAN CHOOSE FROM, EACH WITH ITS OWN CHARACTERISTICS AND POTENTIAL BENEFITS.
Blue-chip stocks are shares of large, well-established companies with a history of stable earnings. They are considered relatively safe investments and often pay dividends.
Dividend stocks are shares in a company that regularly pays out a portion of its profits to shareholders in the form of cash or additional shares.
Growth stocks are shares in a company that is expected to grow at a rate significantly faster than the average market or industry growth rate.
Defensive stocks are shares in a company that provide consistent performance and stable earnings regardless of the overall economic conditions.
Cyclical stocks tend to follow economic cycles, performing well during economic booms and poorly during recessions.
Penny stocks are low-priced, highly speculative stocks that carry significant risk.
INVESTMENT NEWS FOR BEGINNERS
The Fed is likely to cut rates for a 3rd time this year. What happens next year is less certain.
The Fed is expected to cut its main interest rate by 0.25 percentage points (a “25 basis point cut”) for the third time this year. This decision is not unanimous, and some officials want to pause or move more slowly. Some economists describe this as a possible “hawkish cut” - the Fed cuts rates now, but clearly warns markets not to assume lots of further cuts are coming. Inflation has come down from earlier peaks but is still above the Fed’s 2% target, and some officials worry that cutting too much could let inflation get “stuck” at a higher level.
Why this matters to you…
Markets often move on expectations of future cuts, not just the cut itself. Investors have been trying to guess how many cuts are coming, and those expectations have swung around a lot.
If the Fed delivers a “hawkish cut” (cut + tough talk), it can disappoint traders who were betting on many more cuts, which can increase volatility in stocks.
For beginner investors, this means no one has a reliable crystal ball about the exact path of rates, so building a plan that only works if “rates keep falling” is risky.
What you need to do…
Track Fed meetings on a calendar: Mark the next Fed announcement dates (they happen about every six weeks). Set a reminder to read a quick summary afterward, so you get used to how these updates influence your money without diving into details every time.
Pay attention to the chain: Fed outlook → market expectations → stock and bond prices → what it does to your portfolio value to try and anticipate potential future impacts.
Five reasons investors are feeling good about stocks again.
Stock investors are feeling optimistic again, going into 2026. Valuations don’t look crazy, the economy and company profits are holding up, gains have broadened beyond just big tech, inflation expectations are calmer, and lower interest-rate expectations are giving stocks a boost.
Why this matters to you…
When valuations are not extreme, it reduces the risk that you’re buying into a bubble that could burst sharply.
Markets always fluctuate, but this optimism reminds new beginner investors that recoveries happen. Understanding these reasons helps you build habits like checking the financial news without overreacting, which protects your portfolio from emotional decisions.
What you need to do…
Stay diversified. The shift from “only big tech driving returns” to “more sectors participating” highlights why diversified funds (broad index ETFs) can be safer than a few isolated stocks.
Wall Street’s 2026 outlook for stocks.
Several big banks and research firms have set target levels for the S&P 500 for 2026, and most of those targets assume the market will be higher than it is today, but not in a straight line, and not at the huge pace seen in some past years. Analysts expect company profits (earnings) to grow strongly in 2026, roughly in the mid-teens percentage range, and they see that profit growth as the main engine for stock prices going up. Whilst Wall Street is cautiously optimistic for 2026, expecting higher earnings and somewhat higher stock prices, there will be inevitable bumps along the way.
Why this matters to you…
Many strategists acknowledge that the market is already expensive compared with history, even if they think it can stay that way or move a bit higher. As such, this is a reminder that starting valuation affects future returns. If you buy when things are already pricey, future gains might be smaller and drawdowns can be sharper.
What you need to do…
Many of the numbers in the article are targets for where the market might be in late 2026, not next month, reinforcing that serious investors operate on multi‑year timelines. So, a practical move is to build an investing plan around regular contributions (e.g., monthly into a diversified fund) and stick with it through volatility, instead of chasing short‑term forecasts.
Thanks for reading this 14th edition.
I can’t remember when we were last able to deliver not 1, not 2, but 3 (broadly) optimistic articles from our friends in the financial news.
What they often lack in positivity, they more than make up for in wisdom. So let’s give ‘em credit when it’s due.
See you next week!