Investment strategies
Investment strategy is a set of rules that you are guiding you in the stock selection process. A complete strategy should answer several questions:
Which assets (stocks) you should sell?
For each stock in your portfolio, ask yourself "Would I buy this stock having some money to invest?" If the answer is no, you should probably sell this stock.
How much you should buy?
This is a complicated question. Well, the question is simple, but the answer is complicated and it requires a lot of math. To simplify answer here is a proverb "Don't put all your eggs in one basket". The more complicated answer is that you should read about modern portfolio theory. Fundamentals are following: You should know for each stock its risk and return. Knowing this you can select the portfolio with the highest return with desired risk, or vice verse, the portfolio with the lowest risk and desired return. To simplify this answer we could say: "Don't risk more than you can afford", "Don't risk much for little".
Which assets (stocks) you should buy?
The answer to the question depends on the type of an investment strategy you choose.
Here is the list of some investing strategies.
1. Buying low price to book value companies
2. Buying low P/E Ratio stocks
3. Buying stocks with lowest price to sales ratios
4. Buying stocks with highest dividend yields
5. Buying Loser Stocks
6. Buying stocks of firms with idea to replace bad management
7. Trading on News
8. Timing the Market
9. Investing in Small Cap companies
10. Investing in IPO
11. Trend following
12. Investing in Index funds
13. Investing on economic indicators
14. Technical investing
Which assets (stocks) you should sell?
For each stock in your portfolio, ask yourself "Would I buy this stock having some money to invest?" If the answer is no, you should probably sell this stock.
How much you should buy?
This is a complicated question. Well, the question is simple, but the answer is complicated and it requires a lot of math. To simplify answer here is a proverb "Don't put all your eggs in one basket". The more complicated answer is that you should read about modern portfolio theory. Fundamentals are following: You should know for each stock its risk and return. Knowing this you can select the portfolio with the highest return with desired risk, or vice verse, the portfolio with the lowest risk and desired return. To simplify this answer we could say: "Don't risk more than you can afford", "Don't risk much for little".
Which assets (stocks) you should buy?
The answer to the question depends on the type of an investment strategy you choose.
Here is the list of some investing strategies.
1. Buying low price to book value companies
2. Buying low P/E Ratio stocks
3. Buying stocks with lowest price to sales ratios
4. Buying stocks with highest dividend yields
5. Buying Loser Stocks
6. Buying stocks of firms with idea to replace bad management
7. Trading on News
8. Timing the Market
9. Investing in Small Cap companies
10. Investing in IPO
11. Trend following
12. Investing in Index funds
13. Investing on economic indicators
14. Technical investing
Labels: general
posted by Zoran Maksimovic at
4:28 AM
2 Comments:
Hi Zoran,
Your blog is great. I am interested in discussing your work with you. I run a trading site and would like to discuss the possibility of publishing your comments on it.
Please email me to discuss this further.
email: mglekin@gmail.com
Almost all investment choices have some risk, but also have some huge possible rewards. Understanding your own tolerance for risk will help you pick the investments that are best for you. Keep up to date on what your investments are doing to make sure they still fit your own personal preferences.
Regards
Indian Markets
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