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
MARKET CAPITALISATION, OFTEN CALLED “MARKET CAP”, IS SIMPLY THE TOTAL VALUE OF A COMPANY’S OUTSTANDING SHARES IN THE STOCK MARKET. MARKET CAP IS CALCULATED BY MULTIPLYING THE TOTAL NUMBER OF A COMPANY’S OUTSTANDING SHARES BY ITS CURRENT STOCK PRICE.
Market cap is used to:
Measure a company's size in the stock market.
Compare companies' relative sizes.
Categorise companies (e.g. large-cap, mid-cap, small-cap).
Market cap:
Fluctuates as stock prices change.
Is different from a company's actual worth or book value.
Is often used to assess potential investments and risk levels.
Market cap formula:
Market Cap = Current Share Price × Total Number of Shares Outstanding.
Example:
If a company has 1 million shares outstanding and its stock price is £50, its market cap would be:
£50 × 1,000,000 = £50 million.
INVESTMENT NEWS FOR BEGINNERS
2026 will be all about hard power.
In the world of politics, “hard power” refers to a country using its military and economic strength to get what it wants, rather than using "soft power" (like diplomacy, culture, or persuasion). 2026 has started with a shift toward this "might is right" approach with two major events involving the U.S. under Donald Trump: a military operation to capture the leader of Venezuela and an aggressive push to acquire Greenland. Because of these events, the world is moving away from peaceful cooperation and toward a period where countries are focused on building up their militaries and controlling natural resources (like oil and minerals).
Why this matters to you…
Defence stocks (companies that make weapons, equipment, etc.) can rise when governments are likely to boost military spending, as seen after the Venezuela raid.
Oil and mining stocks can move when there is conflict or tension in resource‑rich regions, because investors worry about supply and expect higher prices or disruptions.
Geopolitical shocks like this often increase day‑to‑day volatility in markets, meaning share prices can swing more sharply up and down in the short term.
What you need to do…
Watch the "themes," not just the Headlines. Instead of worrying about every single tweet or raid, look at the big trend. The trend for 2026 appears to be increased government spending on national security. As a beginner investor, you might research "ETFs" (baskets of stocks) that focus on the "Aerospace and Defence" sector, as that is where the money is currently flowing.
Economic update: What to expect in 2026.
The UK economy ended 2025 on a weak note, with the economy shrinking slightly and no real growth for several months. 2026 is likely to be another tough year when people will probably spend less because their incomes are under pressure from higher taxes, higher living costs, and a weaker jobs market. Inflation (the rate at which prices rise) is expected to fall back towards the Bank of England’s 2% target, and interest rates are expected to come down a bit – but only slowly and not back to the very low levels seen years ago.
Why this matters to you…
The Bank of England has already cut rates a bit and is expected to cut perhaps two more times, but then pause once rates are near a “neutral” level (neither boosting nor slowing the economy).
Bond prices can benefit when rates fall, but if cuts are small and slow, the boost is limited. Shares often like lower rates, but the benefit is offset if the economy is weak.
What you need to do…
Even as inflation falls, it still slowly erodes cash. This is a key reason to invest for long‑term goals rather than staying entirely in savings accounts.
Keep an eye on tax announcements (Budgets, Autumn Statements), especially any changes to ISAs and pensions, as these wrappers help you keep more of your investment growth.
Why is Trump’s justice department investigating Fed chair Jerome Powell?
The Department of Justice (DOJ) has launched a criminal investigation into Jerome Powell, the head of the Federal Reserve. The official reason given for the investigation is a dispute over the costs of renovating the Federal Reserve’s headquarters in Washington, D.C. The government is questioning whether Powell was truthful during his testimony to Congress about why the project’s budget grew so large. However, Jerome Powell and many economic experts argue that this investigation is actually a "pretext"—an excuse to pressure him. They believe the real issue is that President Trump wants the Fed to lower interest rates quickly to boost the economy, but Powell and the Fed have been keeping rates steady to make sure inflation stays under control. Because the Fed is supposed to be "independent" (meaning it makes decisions based on data, not politics), this investigation is seen as an attempt to force the Fed to do what the President wants.
Why this matters to you…
If political pressure forces the Fed to cut rates too fast, it can push stock prices up in the short term but also risk higher inflation later, which hurts purchasing power and can hit bond values.
For a beginner investor, it is a reminder that stock prices and bond yields are influenced not only by company profits, but also by government actions, legal threats and public clashes with central banks.
What you need to do…
Even if you mainly buy index funds or big diversified ETFs, big political stories around central banks can move your portfolio’s value. Build a habit of following simple explanations of central bank stories (like this one) so the headlines feel less scary and more understandable over time.
Build a ‘mental model’ of the Fed:
- The Fed controls short‑term interest rates in the US.
- It is meant to be independent from the president.
- Markets care a lot about whether it is truly independent.
Each time you see news about the Fed, ask: what is this telling me about future interest rates, inflation, and risk appetite in markets?
Thanks for reading this 16th edition.
In the coming week, we are entering one of the most pivotal weeks of the quarter. The combination of "sticky" inflation data, the official kickoff of the Q4 earnings season, and the impact of the recent US government shutdown on data reporting will keep volatility high.
In short, investors are dealing with information asymmetry. Between the distorted government data and the high expectations for corporate profits, there is a wide gap between "best-case" and "worst-case" scenarios. This uncertainty is why we are seeing "wild swings" as every headline is published.
So, keep your powder dry - it could be bumpy, but stick to your plan and we’ll speak again next week!