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Investment Strategies
Categories
- Value Investing
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Growth Investing
|- Income Investing
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Market Capitalization
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Momentum Investing
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Technical Investing
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Buy and Hold Strategy
- Buy What You Know
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Contrarian Investing
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Turnaround Investing
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Tobin’s Q
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Responsible Investing
- ADR's
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Global Investing
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The Dow Theory
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Odd-Lot Theory
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Election Cycle Theory
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Dow Dividend Theory
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Penny Stocks
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Initial Public Offerings
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Dollar Cost Averaging
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Drips
- Risk Tolerance
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Buy What
You Know
This technique is used by observant investors, who
are able to identify and invest in early stage businesses. The objective is
to identify profitable small cap companies. The local Sunday papers usually
track the 100 or so small publicly traded companies in your area. You may
know people who work for them. You may use their products. You may hear if
they are hiring. The local papers may do write-ups on them.
Keep your
eyes open at work. Look at those competitors who are always winning the bids
or have superior products. Notice the suppliers who offer exceptional value
and service; they may make excellent investments. By understanding their
business models, you can gain an edge over the rest of the world. Most
likely, these companies will not be the next Microsoft, but you may be able
to find a good quality, well managed, undiscovered company among them.
Fidelity used this approach for years and it worked. Investing around the
world to find the next Microsoft, in technologies you know little about, is
very risky. The “buy what you know” strategy seems appropriate when dealing
with small cap and local companies. |
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