Hi,
There are a lot of instructions telling the beginners how to invest money but nobody points to the particular companies. Different asset managers seem to know exactly what brings profit on financial market and what does not. However, their views do not coincide and this is a problem for us. Whom should we believe in this case?
All of them are, actually, mistaken. Sooner or later, they are not able to cope with a task or index funds. The phrase ‘in the end’ is important here. Much depends upon the time period – when is that point? With choice of different time horizons, various approaches can be applied. The strategies differ depending upon the time factor. The particular strategies should be chosen for short-termed periods, while for longer periods other methods are employed. So different strategies are effective but they vary depending upon the conditions.
First, the investor should determine the goal for investing. The cases for large and small caps vary. One can invest into bonds, dividend stocks, growth stocks, commodities, value stocks and use diverse strategies for different cases.
Buying low is a strategy that proved to be effective with time and it works in most cases.
When the investor is not limited with certain period of time buying low brings profit in majority of cases. If you look at the historical averages you will see that it is really so.
To put it differently, when a stock is trading lower than the level of its historical average price (for instance, when the company does not leave business), the odds of success are really good. It accounts for profitability of diversification and dynamic asset allocation.
There was one good example of this in my previous practice.
The investor neglected all warning on European debt crisis and made investments to 3 devastated industries. He bought stocks in home construction, mortgage finance and home improvement retailers. The name of this approach is buying low because he would earn 60-130% on that over time. The bad performers at the same time are the ones who invested to aluminum, coal and mining.
The industries that were mentioned in this article needed large enhancements. If you want the economy to improve and ready to wait until that happens you should look for the areas, in which you can buy low. It is always advised to buy diverse small cap stocks because this approach is rational for all investors.
Good luck.
There are a lot of instructions telling the beginners how to invest money but nobody points to the particular companies. Different asset managers seem to know exactly what brings profit on financial market and what does not. However, their views do not coincide and this is a problem for us. Whom should we believe in this case?
All of them are, actually, mistaken. Sooner or later, they are not able to cope with a task or index funds. The phrase ‘in the end’ is important here. Much depends upon the time period – when is that point? With choice of different time horizons, various approaches can be applied. The strategies differ depending upon the time factor. The particular strategies should be chosen for short-termed periods, while for longer periods other methods are employed. So different strategies are effective but they vary depending upon the conditions.
First, the investor should determine the goal for investing. The cases for large and small caps vary. One can invest into bonds, dividend stocks, growth stocks, commodities, value stocks and use diverse strategies for different cases.
Buying low is a strategy that proved to be effective with time and it works in most cases.
When the investor is not limited with certain period of time buying low brings profit in majority of cases. If you look at the historical averages you will see that it is really so.
To put it differently, when a stock is trading lower than the level of its historical average price (for instance, when the company does not leave business), the odds of success are really good. It accounts for profitability of diversification and dynamic asset allocation.
There was one good example of this in my previous practice.
The investor neglected all warning on European debt crisis and made investments to 3 devastated industries. He bought stocks in home construction, mortgage finance and home improvement retailers. The name of this approach is buying low because he would earn 60-130% on that over time. The bad performers at the same time are the ones who invested to aluminum, coal and mining.
The industries that were mentioned in this article needed large enhancements. If you want the economy to improve and ready to wait until that happens you should look for the areas, in which you can buy low. It is always advised to buy diverse small cap stocks because this approach is rational for all investors.
Good luck.
