Equity Investment Strategy

“Investment style is incredibly important Because of the way that investing works,” says Chris Geczy,

 Volatility is part of Equity market investing.  However, you can define your “Investment Strategy”. Investment strategy gives you the opportunity to meet your goals and expectations and aligning investments to your risk profile.  Traditionally there are two types of strategy. One is Fundamental analysis and secondly Technical analysis. However, modern day, analysts have come out with various strategies. Here, we are putting some of the popular strategy.

Equity (portfolio) Strategy based on

 

  • Fundamental Analysis – This investing strategy is based on fundamental of the company based on past data.
  • Qualitative Analysis – Company performance is analyses based on various quantitative parameters like Price earnings ratio, cash flow statement etc.
  • Value Investing – Incase of value investing method, investor, looks for stocks with strong fundamentals – including earnings, dividends, book value, and cash flow. Based on this they come out with a fair value of the stock & invest if price is less than intrinsic value of the company.
  • Growth Investing – Growth investing is exactly opposite to value investing. Growth investor sees the future potential of the company. They may buy it even at premium valuation.  They believe that company’s intrinsic value is will grow in the future &, so they invest. 
  • GARP Investing  (Growth at reasonable price) – This strategy is a combination of both value and as well as growth investing.  Here investor looks for the companies which are presently undervalued however provide solid and sustainable future growth potential .
  • Dividend (Income Investing) – In this strategy, investor primarily looks for dividend as basics of investing. Generally conservative investor prefers this approach & looks for those stocks which provide regular dividend. Dividend yield is yardstick for investing. 
  • Technical Analysis – In this style of investing, investor chose stocks based on price and volume pattern. Analysts see the this patter in different indicators and come out with buy or sell recommendation.
  • Top-down or bottom-up investing – incase of top down the asset is chosen  based on the theam. theme.  While in case of bottom up analysts chosee stocks based on inherent strength of the company

 

  • Contrarian investing – in this case the anylysts choose assets that are out of favor stocks or sector. 

 

All the above style of investing are unique in nature & each style of investing has its own advantage and disadvantages. Diversification among investment style may provide balance in the portfolio.

This is an article published for my student reader. Any suggestion & feedback is welcome. One may contact me at bonpriya@gmail.com

 

Another article on Dividend investing – one may read at – http://www.einfomet.com/earn-8-plus-from-dividend-yield-portfolio-india

One may refer (photograph taken from) http://www.tradestation.com/en/education/university/markets-and-trading-resource-center/articles/mutual-funds/fund-objective-and-style

 

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3 Comments to Equity Investment Strategy

  1. […] Volatility is part of Equity market investing.  However, you can define your “Investment Strategy”. Investment strategy gives you the opportunity to meet your goals and expectations and aligning investments to your risk profile.  Traditionally there are two types of strategy. One is Fundamental analysis and secondly Technical analysis. However, modern day, analysts have come out with various strategies. Here, we are putting some of the popular strategy. – See more at: http://www.einfomet.com/equity-investment-stretegy/#sthash.L6NNDUdV.dpuf […]

  2. […] "Investment style is incredibly important Because of the way that investing works," says Chris Geczy, Volatility is part of Equity market investing. However, you can define your “Investment Strategy”. Investment strategy gives  […]

  3. […] "Investment style is incredibly important Because of the way that investing works," says Chris Geczy, Volatility is part of Equity market investing. However, you can define your “Investment Strategy”. Investment strategy gives  […]

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