When deciding on an investment strategy, there are many approaches you can take. Each style follows certain rules and measures investment risk in different ways. Here are some investment styles you can pursue and a brief description of how each strategy tackles risk management:
Trend following and technical trading – 2 styles that do not often count fundamentals into their strategy and will minimize loss by drawing a “line in the sand” and closing positions if they do not go in the “right” direction
MPT Theory – an asset allocation style that stresses diversification of asset classes (stocks, bonds, foreign, real estate etc) as risk reduction and being fully invested
Barbell Strategy – a strategy that mixes a large allocation to conservative investments and a small allocation to very speculative investments. The idea is that a small allocation to highly risky investments would give a similar return to a large allocation of regular growth investments. And risk would be limited to that small investment.
Floor & Upside Theory – a retirement income strategy that reduces risk by ensuring a certain level of income in safer investments and investing “surplus” assets in riskier investments.
Concentrated Portfolio – a style of investing in a small number of investments. Risk management comes in the form of the investor being more easily able to follow a small basket of stocks than a large basket.
Index Investing – a “passive” investing style of investing that features its risk management through a very broad diversification of holdings.
This selection of investment styles is not meant to be an exhaustive list nor is it a recommendation to follow any of these strategies. This page is list of educational pages on this site. Feel free to contact us at 781.393.0021 or use our Contact Form if you would like more information.