What Kind of Investor Are You???
Know when to Buy & Sell
Investment styles
Investment Styles:
Value Buyer
Momentum Buyer
Contrarian Seller
Momentum Seller
Value Buyer
Style-"Buys at a Discount," trying to be early, and "Buy Low."
"Bottom-fishers" want stocks which are sound but have "over-corrected."
Wants strong fundamental performance, but weak stock price performance, i.e. "value."
Goal - Buy "early" before a secular or cyclical move occurs.
Risk - you are too early, and lose money before the turn occurs.
Momentum Buyer
Style- Knows "The Trend is your Friend"
Buys stocks which "are working," but priced at a discount to the peer group.
Goal - Buy midway into a secular or cyclical move.
Risk - You are late, and make the top. The seller knows more than you do.
Contrarian Seller
Style- Sell what's "Working" at or near the peak. Trying to "Sell High."
Sell the "Darlings," stocks trading at a premium, yet growth is slowing.
You are trying to be early, and sell while Wall Street is still positive.
You know the next opinion change is a down tick, or
you think the stock is priced out of line, at an undue premium to the peer group.
Risk - You are too early, and could have sold higher later.
Consolation - Do something else with the money, you do have choices.
Momentum Seller
Style- Sell what's "not working" and "Cut Your Losses."
Risk - It will start working after you sell.
Consolation - There are worse problems.
Jim |
