How you can have a stronger portfolio?
Can you relate to this feeling?
“The company’s fundamentals look great. All of the analyst’s love the stock, but it keeps going down!”
Global financial markets today offer more and more choices to investors. More choice is good, but without some kind of framework to help decide which choices to make the task can be difficult.
We all know that the financial markets offer an ample amount of risk and return. It is because of the risk that the return is possible. Financial markets can provide some of the best available opportunities for investors to build and preserve long-term wealth, however, to capitalize on the opportunities, investors need to have a strategy.
Whether you are a novice investor or the most sophisticated investor, using the basic laws of the markets can be advantageous when making investment decisions.
The stock market is full of differing opinions. It has to be or else it wouldn’t work. If for example you want to invest in shares of Coca Cola then there has to be someone who wants to sell them, right? If everyone only wanted to buy Coca Cola and no one wanted to sell then you wouldn’t have a market. This is part of the basics of supply and demand that we all intuitively understand. The same rules apply in the grocery market. We know why in the winter tomatoes don’t taste as good, don’t have a very long shelf life and are more expensive. A strong demand, but with a weak supply can only mean higher prices.
Investments move in and out of favor just like produce in the supermarket and a strategy that can help identify these changes is called relative strength investing.
Relative strength offers a systematic approach to investing and is the investment factor upon which we build our investment portfolios.
We rely on relative strength to manage portfolios because of its adaptive nature and its long term track record of success. It is simple in concept, yet powerful in application.
A common approach on wall street is the traditional strategic investing approach which suggests to diversify your portfolio over a wide range of investments. They call this asset allocation.
Using a tactical approach such as relative strength allows us to identify the leaders from the rest of the pack. It is the market leaders that we want to own. In the same way it also helps to identify the laggards. We believe and research validates that by investing in the leaders while avoiding the laggards are key to a successful portfolio.
I have been a financial advisor since 1990 and was trained to follow some of the basic tenets of long term buy and hold investing. Using relative strength in my opinion is not only a much more common sense approach, but a more effective approach to building strong portfolios.
If you want to learn how using relative strength with your own portfolio can help then get our report the 5 Keys To Create A Strong Portfolio.
In this report you get the 5 keys to…
- A portfolio that is stronger than the market
- An all-weather portfolio for all market conditions.
- A portfolio that will provide you a stress-free retirement.