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 PRICE-TO-EARNINGS (P/E) RATIO IS A SIMPLE WAY TO MEASURE HOW EXPENSIVE A COMPANY’S STOCK IS RELATIVE TO IT’S EARNINGS. THE P/E RATIO ALSO ALLOWS INVESTORS TO COMPARE THE RELATIVE VALUE OF DIFFERENT COMPANIES’ STOCKS, EVEN IF THEIR SHARE PRICES DIFFER SIGNIFICANTLY. IT’S MOST USEFUL WHEN COMPARING COMPANIES WITHIN THE SAME SECTOR.
A higher P/E ratio generally indicates that investors expect higher earnings growth in the future, while a lower P/E ratio may suggest the stock is undervalued or that investors have lower growth expectations.
The formula to calculate P/E ratio is:
Stick price / Earnings per share.
Example:
If a company's stock is trading at £50 per share and it has earnings of £5 per share, its P/E ratio would be:
£50 / £5 = 10
This means investors are willing to pay £10 for every £1 of the company's earnings.
INVESTMENT NEWS FOR BEGINNERS
Coherent’s $23 billion growth opportunity lifted by NVIDIA’s optical ambitions.
Coherent Corp., a company that makes high-tech components for data centers (the giant ‘brains’ that power the internet and Artificial Intelligence), has revealed that they expect their potential market, the total amount of money they could earn from their products, to grow to over $23 billion. This is largely because NVIDIA, the world leader in AI chips, is changing how its supercomputers are built. NVIDIA is moving toward ‘optical’ technology, which uses light instead of electricity to move data. Because Coherent makes the specialised lasers, tiny glass fibers, and cooling materials needed for this, NVIDIA’s success creates a massive ripple effect that benefits Coherent Corp. Essentially, as AI becomes more powerful, the hardware needed to run it must get faster and cooler, and Coherent Corp. is positioning itself as the primary supplier for those parts.
Why this matters to you…
The ‘picks and shovels’ strategy: In a gold rush, the people selling the shovels often made more consistent money than the miners. This news shows that while NVIDIA (the ‘miner’) is the big name in AI, companies like Coherent (the ‘shovels’) are essential partners. It’s a reminder that beginner investors should look at the whole supply chain.
Thermal management: As AI uses more electricity, companies that help save energy or manage heat (like Coherent Corp.) are becoming more valuable. This is a growing sub-sector for those who are interested in green-investing.
Market interconnectedness: This is a perfect example of how a giant company (NVIDIA) can influence the stock price and future of a smaller company (Coherent Corp.). As a beginner investor, it helps you understand why some stocks move in tandem.
What you need to do…
Look beyond the famous names: You don't always have to buy the most expensive, popular stock (like NVIDIA) to benefit from a trend. Often, the companies providing the parts to those giants have more room to grow.
Identify bottlenecks: AI is currently limited by two things: speed and heat. Coherent Corp. is solving both by using light (speed) and special diamond materials (cooling). Investing in companies that solve bottlenecks is a classic, successful investment strategy.
Watch the ecosystem: When a leader like NVIDIA commits to a new technology (like ‘Co-Packaged Optics’), the rest of the industry usually follows. This creates a structural demand, meaning it’s not just a one-time purchase but a shift in how everything will be built for years to come.
OpenAI’s data center pivot underscores Wall Street spending concerns ahead of IPO.
OpenAI (the company that made ChatGPT) is preparing to become a public company, meaning it wants to list its shares on the stock market (an IPO) so that anyone can buy them. However, building the ‘brains’ of AI, massive warehouses full of computers called data centers, is becoming incredibly expensive and difficult. As such, OpenAI is pivoting its strategy. Instead of trying to build everything itself with custom-made chips and massive individual projects, it is scaling back and being more cautious. Wall Street is worried because OpenAI is spending billions of dollars but isn't making a profit yet. Investors are starting to ask: "If it costs this much just to keep the lights on, will this company ever actually make money for its shareholders?"
Why this matters to you…
AI bubble?: For the last two years, the stock market has gone up mostly because people are excited about AI. If a leader like OpenAI shows signs of struggling with costs, it could cause the stock prices of other tech giants (like Nvidia, Microsoft, and Google) to drop.
The ‘burn rate’ concept: Beginner investors often focus on a company’s revenue (how much money earn). This news highlights burn rate (how fast they spend it). This is a lesson that a cool product doesn't always mean a safe investment if the costs to run it are too high.
IPO risks: An IPO is often seen as an exciting chance to ‘get in early’. This serves as a warning that IPOs are often risky because the company’s internal struggles (like these massive data center costs) are often hidden until they are forced to go public.
What you need to do…
Don't just follow the hype: Just because everyone is talking about a technology (AI) doesn't mean every company in that space is a good investment. Always look at whether the company has a clear path to making more money than it spends.
Understand the ‘Initial’ in IPO: When a company first goes public, there is often a lot of marketing to make the company look perfect. This article shows that even the most famous companies have deep financial challenges. As a beginner investor, it is often safer to wait a few months after an IPO to see how the stock performs once the hype dies down.
Remember that cash is king: In a world where it costs $100 billion to build a data center, only companies with massive cash piles (like Microsoft or Apple) can survive long-term. When picking stocks, check if the company has enough cash to survive a pivot or a delay in their plans.
Gold drops nearly 10% in worst weekly rout since 2011.
For the past year, gold prices have been skyrocketing, hitting an all-time high of over $5,600 in January 2026. However, last week, that trend took a sharp U-turn. The price of gold fell by about 10% in just five days, the biggest weekly drop in 15 years. While there is a war in the Middle East (which usually makes gold prices go up because people get scared and buy ‘safe’ assets), the opposite happened. Gold prices crashed because the war caused oil prices to spike. High oil prices make everything more expensive (inflation), which forced the Federal Reserve (the US central bank) to signal that they will keep interest rates high. When interest rates are high, investors prefer to keep their money in banks or bonds where they can earn interest, rather than in gold, which pays nothing.
Why this matters to you…
The ‘safe-haven’ rule is broken: Usually, gold is a ‘safe-haven’, a place to hide when the world is in chaos. This news shows that this rule isn't perfect. Sometimes, macro factors like interest rates are more powerful than fear factors.
The power of the US dollar: Gold is priced in US Dollars globally. Right now, the Dollar is very strong. When the Dollar is ‘expensive’, it takes fewer dollars to buy the same amount of gold, which naturally pushes the gold price down.
Inflation tug-of-war: Usually, gold protects you from inflation. But if inflation is so high that it forces the government to raise interest rates aggressively, gold can actually lose value in the short term.
What you need to do…
Watch the Fed: As a beginner investor, start paying attention to the Federal Reserve’s meetings. Their decisions on interest rates often move the price of gold and stocks more than any war or political event.
Gold is a diversifier, not a lottery ticket: Most experts suggest gold should only be a small part of your portfolio, so consider capping your gold exposure to 5% - 10%. It is there to provide balance, not to make you rich overnight. If you had 100% of your money in gold last week, you’d be panicking. If you had 5%, it's just a small bump in the road.
Don't chase the hype: Many people bought gold in January 2026 when it was at its highest ($5,600) because they were afraid of missing out. They are now down over 20%. Never buy an asset just because the price is currently soaring and everyone is talking about it.
Thanks for reading this 25th edition. said
Buckle up, because it’s a big week for ‘check-up’ data in the markets!
We’re diving into the Flash PMI reports and final GDP numbers, which are basically the economy's way of telling us if it’s feeling healthy or catching a cold.
With central banks finally taking a breather on rate hikes, everyone is laser-focused on whether businesses are still spending and if the housing market can handle these higher mortgage rates.
Watch out for a flurry of ‘fed-speak’, and some big bond auctions that could keep things spicy for your portfolio.
See you next week!