Great investors competently control their emotions and committedly stick to their planned strategy. These predetermined strategies define the stock types to buy, time to enter a position, and even when to exit even if the price movement is in your favor.
Beginners can read the weekly magazine, ‘The Public Investor’ to learn about the long-term investment strategies influenced by book author Prof. Dr. Otte. There are multiple strategies, which can intimidate beginners but here are some best ones to consider.
Timings of cyclical & non-cyclical investments
Cyclical stocks are strongly correlated to the economy. Therefore, when the economy rises, the cyclical stock price increases and vice versa. Non-cyclical stocks follow a stable growth pattern and are a safe investment option in a tough economic environment.
- During a positive economic situation, investors can earn good profit investing in cyclical stocks.
- During economic unrest sell the cyclical stocks and buy non-cyclical investments.
- You can read the buying and selling signals with ease as the strategy is concentrated on economic conditions.
- Timing the stock market carries potential risk even if the strategy is focused on the economy and correlation with cyclical & non-cyclical stocks.
- Economic analysis is a challenging task.
- Cyclical stocks pay less or no dividend, so income investors will not find this a good option.
Combining growth & dividend
Growth stocks generate more value in a short time, whereas dividend stock displays slow and steady growth. To find high growth stocks check the annual return rates. For high dividend stocks check dividend payers and the percentage they pay.
- Stocks paying high dividends are safe investments.
- Dividends are income.
- Dividend stocks generate consistent growth. For example, Utility and consumer staple industry is always in demand, so they never hesitate during economic unrest.
- Diversification is hard.
- Balancing your portfolio consistently is essential.
- Growth is consistent but steady, so you cannot anticipate short-term big gains.
Remember, the strategies have increased risk levels. A move in opposite direction can turn into a costly error. Therefore, understand the market and investing process in detail.