Know Some Of The Most Popular Investment Strategies That Work And When Dealing With the Stock Market

Mon, May 6, 2013

Top Investment Strategies

Investing can be the most rewarding and freeing experiences you ever have.

Or it can be the most stressful and destructive experience you ever go through.

best investment strategy 2015Only you can decide which one it will be.

The first step to getting on the successful path to investing is choosing an investment strategy. Here are a few of the most popular and one that always works.

Popular Investment Strategies

Now there are a number of paths you can take to reach those financial goals. These paths are called strategies.

Note: There are a number of popular investment strategies which work. Or, in other words, help you make money. Not all of the popular investment strategies will work.

One of the most Popular Investment Strategies is to “buy what you know.”

This strategy requires you to look at the companies which make products you buy and use. For example, if you have a Verizon (NYSE:VZ) cell phone plan or drink Starbucks (NASDAQ:SBUX) coffee, the theory goes that if you like these products, many more people will and do too. And the company that provides them will grow over time because they provide a good product or service. And you would know because you use it.

That’s buying what you know. But it’s just one of many investment strategies.

Another popular investment strategy is to “buy the market.”

What I mean by buying the market is to buy the entire stock market. Then whether the market goes up or down, your portfolio goes right along with it.

This strategy normally involves buying into a fund or an Exchange Traded Fund (ETF) that buys an entire index. The most common index is the S&P 500 Index which tracks the 500 of the largest publicly traded companies in the world. There’s also the Wilshire 5000 Index which buys 5000 of the largest publicly traded companies. There are many more broad market indices which you can invest in, but you get the point.

The thing about this strategy is the investment results are the same as the overall market. Your investment goes up and down with the markets. This is, of course, great in a rising market. But it’s disastrous when the market falls. Given the future outlook, there will be a lot of ups and downs and no steady long-term bull market for the overall market.

Another popular investment strategy is to follow what’s called “insider buying.”

You see, when a company insider – like the CEO, CFO, or a director – buy or sell shares of a company, they have to disclose that in a filing with the Securities and Exchange Commission.

The theory behind the insider buying strategy is that the insiders who know the company best are only going to be buying if the company is doing well.

best investment strategies

This strategy makes a lot of sense on paper and is followed by a number of investors. After all, the insiders who know the company best are putting their money into the company. There has to be something good going on, right? Well, the theory makes sense. But the results don’t always.

There are dozens of more popular strategies too. Any list of investment strategies would include Contrarian  (buying what’s out of favor), growth investing (buying what’s hot), value (buying what’s cheap), income investing (seeking to get the maximum amount of income from your investments), and dozens more.

There are even more investment vehicles to use to apply those strategies to your portfolio. A list of popular investment vehicles would start out with stocks, bonds, Exchange Traded Funds, mutual funds, hedge funds, private equity, options (and all derivatives) and real estate.

All of which offer different risks and rewards. For our purposes, we’ll focus on stocks. And to invest in stocks successfully, you’ll need more than just a popular strategy. You’ll need one that works.

One Investment Strategy that Always Works

The key thing to remember about investment strategies is that not all of them work all the time. That’s what makes investing so challenging.

However, for long term investors (those looking out more than five years), there is one strategy that has worked for investors for centuries.

That’s buying great businesses at a great price.

That sounds simple. And it is. But the application of the strategy is much tougher than it sounds.

There are so many factors which can and will cloud all investor’s judgment from time to time. They include stocks getting hot, sectors which start taking off and you’re not in, and massive market-wide crashes which cause fear and panic throughout the markets.

The first ones where a stock or sector gets extremely hot and everyone is talking about it. Odds are by the time you hear about it, it’s too late. Without fail, investing into today’s hot sector inevitably leads to tears tomorrow. Avoid whatever is “hot.”

The latter event is the market crash. They happen every few years. They are unavoidable. But you have to look at them the right way.

Market crashes are always portrayed as something bad. But they are good.

When a market crashes, the prices offered to investors are often lower than they’ve been in years. As a result, a market crash is the best time to pick up great businesses at great prices.

Finally, no strategy will work if an investor lets his emotions get in the way.

Find a good investment strategy. Learn it. Stick to it. And you’ll be well on your way to being a successful investor.

Good investing,

Andrew Mickey
Executive Editor, Contrarian Insights

Join Now

The Group of Big Investors in United States.

Your Email

what will the price of gold be in 2015

Tags: ,

Like This?

Share This:

Facebook Twitter Share on Google+ Digg Reddit LinkedIn Pinterest StumbleUpon

Recent Post

How to Buy Commodity Stocks Online 2015 - Learn here it’s Safe to Investment in Commodity Market

The how to invest in commodities stock 2015 can correct any fluctuations that investors may have felt recently in their fortunes. The beginning of the year was on a shaky note with the direction of profits not very clear. However, with the months wearing on, the commodities market is once..... Read More...

Is Gold and Silver a Good Investment in 2015? Gold Coins Investment Best Idea for a Great Return

The is investing in gold a good idea right now is the hot conversation for small and big time investors alike. With the crash in real estate markets and the continued disfavor of bonds, gold is the only option which is fast emerging as the fail safe investment. Moreover, gold..... Read More...

Top 10 Best Stocks To Invest In Right Now in 2015, Learn Here How to Buy Stock Now

The top ten best stocks to invest in 2015 can help investors consolidate gains this year with a great margin. These are the stocks one’s would prefer to buy and hold onto for a long time. There are more winners here than losers which sped way past the rest..... Read More...

Best Investment Strategy for High Income Earners, Learn Here Investment Strategies for Buying Stocks

The investment strategies for high income earners are a few of the best special financial tips to help in wealth management. The top 2-3 per cent of the high income earners has a challenging task in holding onto their money and investment may be the only way out to avoid..... Read More...

How to Make Money in the Stock Market with Little Money for beginners, Future Wealth

The how to make money in the stock market with little money is a sure fire way to get out a less than perfect existence. It is a means other catapult in to luxury almost overnight as has been shown by many an investor in all times. Investing in the..... Read More...