The main reasons to employ a specific strategy or set of strategies in your investments are:
Discipline, Emotions, Efficiency, Profits
A strategy is simply a systematic / disciplined approach to achieving an objective. With a well defined strategy we can remain objective and not let emotions influence the decisions and actions called for by the strategy. The strategy can also help us stay above the noise level of the day to day action occurring in the markets. Strategies can also help us be more efficient. None of us have the time or inclination to watch the hour by hour, day by day activity in our investments. A good strategy can provide the framework to fit into our individual work/life balance situations. Managing your investment assets is like managing a business and should be taken seriously. Again, back to discipline and emotion, a good strategy can help eliminate the emotional component and provide the discipline to make the tough business decisions of making a new purchase, selling a loser, or taking profits.
Here's an example. Be honest with yourself as you read this question: Would you be satisfied with a 5% return on an investment? I'll bet your answer is: No,not really... that's nothing to get excited about. And on the surface I would whole heartedly agree. But consider this.... a 5% return on your portfolio / month compounds to an 80% annual return. Does that now give that little 5% return a little more respect? I'm sure it does, but the emotion behind pulling the trigger to sell a 5% gain will often conflict with our ego or greed for more. A good strategy and the discipline to follow it will overcome this and help us achieve the desired objective.
Strategies can be developed for any number of situations and/or expectations. A good strategy should have well defined criteria that outline all aspects of your objective. For investing these might include: Portfolio allocation, timing, selection of stocks, purchase and exit rules, re-investment, etc. With the aid of modern technology and data, strategies can be developed, tested, back tested, and optimized (to some degree). As with anything in the real world (specially the financial markets), the future is uncertain. A good strategy will factor this uncertainty and become adaptive to changing conditions. It will also take advantage of the primary and universal components that actually never do change: Human nature/psychology, fear, greed, macro-economics, etc.
In the Strategies presented here, the main quest is for above average performance with ease of implementation and management. These are a series of portfolio strategies that one can manage and track with a few minutes of work once a week or once a month. These strategies seem to fill the bill as they employ simple yet rigid criteria and rules to be followed. Within each of these individual strategies a number of powerful time proven techniques are employed including: diversification, compounding, and the fact that in any market phase there are always good companies/stocks to select from. These strategies range from conservative to aggressive / speculative and may or may not be appropriate for a portion of your investment portfolio allocations.
Portfolio Strategies:
Reasonable Runaways - The Reasonable Runaways strategy is a fairly conservative growth strategy that selects quality stocks that have a low Price to Sales ratio and that have strong performance during the past 6 months. The expectation is that these very reasonably priced issues will continue their price momentum as they begin to gain new visibility by the large institutions. The model portfolio consists of 25 stocks and remains fully invested at all times redeploying any net gains to new positions. The portfolio is monitored weekly where any necessary changes are determined and communicated to subscribers.
Overlooked Gems - The Overlooked Gems is a growth strategy which selects optionable stocks that have a Price to Earnings ratio (P/E) below 10 and have seen an increase in earnings over the past quarter. The expectation here is that these often overlooked issues will continue their improved EPS performance and gain in value. The model portfolio consists of 10 stocks and remains fully invested at all times redeploying any net gains to new positions. The portfolio is monitored weekly where any necessary changes are determined and communicated to subscribers.
Portfolio X - The Portfolio X strategy is a very speculative strategy that selects lower priced stocks that have shown recent strength and which are among industry groups that are also experiencing a positive price movement. The expectation here is that recent positive momentum supported among a background of industry group strength and momentum will see significant capital gains in a short period of time. The model portfolio consists of 10 stocks and remains fully invested at all times redeploying any net gains to new positions if new issues can be identified, otherwise the portfolio will build a cash reserve in down-trending markets. The portfolio is monitored weekly where any necessary changes are determined and communicated to subscribers.
High-Yield Income - The High-Yield Income strategy is a conservative income strategy which selects quality high-yield income stocks that have both solid fundamentals with positive earnings and sales growth. The primary objective here is strong recurring income with long term capital growth as a secondary objective. The model portfolio consists of 25 stocks and remains fully invested at all times redeploying any net gains to new positions. The portfolio is monitored weekly where any necessary changes are determined and communicated to subscribers.
Wealth-Builder II - The Wealth-Builder II strategy is a special strategy (available only in a separate consulting service agreement). This special strategy selects quality Income, Value and Growth stocks with a specific plan to hold these issues for 12 months to minimize or eliminate any short term capital gains. The expectation is that the combination of Income together with Value and Growth will produce exceptional portfolio growth and wealth accumulation. The model portfolio consists of 25 stocks and remains fully invested at all times redeploying any net gains to new positions. The portfolio is monitored monthly with new quarterly selections presented to clients for selective rotation within their portfolios.
Getting Positioned: