Investing Strategy

  • 06 Jul
    How Diversified Should You Be?

    How Diversified Should You Be?

    • Extreme diversification is good but only provides ordinary results results.
    • Concentrated portfolios proved better in some cases as they allow investors to select the best companies.

    Introduction

    A few days ago we discussed passive and active strategies given that there is a looming risk of a recession and that the markets are unable to break new highs which makes just holding stocks for the sake of holding stocks very risky. In this article we are going to discuss how diversified a portfolio should be as it is easier to pursue an active strategy with a concentrated portfolio of stocks. More →

  • 01 Jul
    Should You Switch to a More Active Investing Strategy?

    Should You Switch to a More Active Investing Strategy?

    • Passive investing has been excellent in the past decade but has gone nowhere in the last two years.
    • Higher valuations are increasing volatility and risk which gives opportunities for more active strategies.
    • Due to the high valuations in 1968, only an active strategy would have produced positive returns in the period up to 1982.

    Introduction

    The S&P 500 has gone nowhere since December 2014. Several reasons have influenced such a performance, but the most impactful factors seem to be market fundamentals deteriorating while central banks keep limiting the downside by increasing available liquidity. The FED was supposed to begin raising interest rates, but the 0.25% hike was insignificant, and now there is even speculation that the FED could lower interest rates again. More →

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