Investing Principle #10: Work Hard to Master One Strategy

This is part of a larger article called The Golden Rules…

Many Beginners have trouble deciding which stock market investing strategy to choose, oftentimes they are even confused about what strategy they are currently implementing. This happens because most people learn about investing from their friends, coworkers, family, and whatever investing related magazines, newspapers, and Internet sites they follow. What they wind up with is a hodgepodge of random information to base their investments on rather than any cohesive strategy. The greatest danger in this is that, while most strategies work quite well on their own if implemented properly, they are usually quite disastrous when investors try to combine them together.

If you are new to investing, odds are you’re implementing a blend of several strategies rather than focusing your time and effort on just one. Take my advice, choose one strategy, and stick with it, don’t try several at onceLike I mentioned above, when you combine strategies with different (often opposing) goals and selection criteria, you are virtually guaranteed to trail the market. Really, that bad? Yes! Over 75% of professional fund managers and investment advisors lag the S&P 500 as it is. Trust me, you have to excel to beat the indices, and to excel you have to master your strategy.

Another reason many investors implement multiple strategies is that they think it will somehow decrease risk or increase returns. This is a mistake. Don’t ever be fooled into thinking combining strategies will insulate you from losses or optimize gains, only proper diversification and asset allocation can do that. Study several strategies, then pick one. Are you an aggressive investor with a long way to go until retirement? Consider becoming a Growth Investor. Do you want a low maintenance portfolio that will guarantee you the market’s return? Consider becoming an Index Investor. Are you risk-averse and hoping to buy companies that are undervalued so that your portfolio can grow while limiting downside potential? Consider becoming a Value Investor. These are just a few examples, there is a great strategy for every type of investor, you will never need to combine them.

Ready to take a good hard look at the most popular strategies? Below I’ve compiled all of the investing strategy review articles that I’ve written since I started Each article will explain the major goals, investment selection methods, strengths, weaknesses, risks, and long-term outlook for 8 of today’s most popular strategies. Very likely, you will be excited about several strategies since great investors have used them to outperform their peers and the market for decades. That is exactly why I conclude each review with a look at the investor profile best suited to each strategy. Pay particular attention to this section. You will not be able to master a strategy if it is at odds with your personality, risk tolerance, or investing goals.

Here is a list of the strategies we’re going to review. Feel free to jump around to ones that you’re interested in or read the guide straight through.

Best of luck and please add your thoughts to this post, we’ll all benefit from your questions and insights.

We will be happy to hear your thoughts

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