Best investment strategies
Sep 15, 2018 // By:Wyatt S. Mora // No Comment
Well, you have decided what you want to achieve by investing, and you know what kind of stock you are looking for. You have a handle on potholes that can stop you and you have learned number-crunch to analyze the performance of the shares. You have one more step to take: to decide how you will apply all this knowledge to your investments. This is both the easiest and the toughest step.
Think about how to buy a car. You have already carried out your research: You have compared prices with other dealers, you have checked the prices of comparable cars. You’ve checked the car sales market to find out how the brand sells and when it’s best to buy. You even talked to previous customers to find out how car dealers bargain here. What will be your initial car deal? How much will you accept for payments? What options do you expect in your car? It’s time to start making real choices.
The trading strategy is rarely black and white. Instead, trading strategies are usually a mix of different options available. My own experience shows that as my portfolio grows, my options grow in direct proportion. In addition, the number of investment strategies represented in my portfolio is increasing, also in direct proportions. Investment strategies, as well as investment targets, should remain liquid in order to adapt to the different circumstances in which you will find yourself, as well as to adapt to any new ideas that you come up with yourself.
An exhaustive list of investment strategies is not possible because they are just as individual as the people who employ them. Stories circulate about people who choose to invest using darts, astrology, and (as I’ve heard) even monkeys. As a new investor, however, you should remember about some of the more popular (and healthier) methods people employ to invest in their stocks:
- Recommendation strategy
Buy and hold
Averaging dollar costs
Mix and match as you see fit; take what you want and leave what you don’t like. In the world of investment, the only right answer is yours.
When people find out that you have started your investment career, the “experts” will start crawling from the woodwork. In all honesty, a significant number of recommendations received by you will have real value. People who discuss the companies they work for are certainly in a better position to discuss their internal structures than the average person on the street.
A recommendation is an advice or information, sometimes unwanted, from other people who may have a better insight into the action than you.
In addition, your friends and family may be able to provide true insight into the company and its products and services with which you may be strangers. When deciding whether to invest in Home Depot, for example, I asked my friend, who is an engineer, to tell me about his or her experiences with them. I am writing financial books, I couldn’t hang drywall systems if she came out and introduced herself to me. After our discussion, however, I felt much better about my final decision.
I asked my brother a lot of the same kind of information before investing in video game actions. I do not play video games, but he does it extensively. My conversations with him allowed me to make an intelligent decision about which games were hot, which systems had problems and which innovations were expected by consumers.
The other side of the coin is best illustrated by the big advertisement currently broadcast on TV. A young guy approaches an outstanding gentleman in an art gallery and whispers to him: “Last week I heard your recommendation for the action and I put all my money into XYZ actions. The old man answers: “Good for you. They will be the only company authorized to produce Widgets as soon as the Martians take control of the Earth,” as his nurse leads him back home.
Morality is obvious: Recommendations are a great source of information, as long as you know the source and knowledge about them.
Research is an unclear term and can cover almost anything. Asking people to share their experiences is a survey, so please copy the company’s annual report. Checking the general press is research, as well as digging resource assessments on the Internet. As a result, it is difficult to give an exact definition of “survey” that applies to each stock and/or investor.
This does not mean that research as such cannot be defined, but rather that each investor has to define which “research” refers to the type of investment decisions he or she assesses. In addition to asking my brother about his insight into video games, I also checked the total annual sales of video games on the Internet in the United States.