Having trouble making up your mind about what investment strategy to adopt? In this blog post, we’ll try to help you find the right approach for your particular personality, preferences and investment objectives. After all, there are many different ways to invest.
Let’s get right into it!
As described by Warren Buffett’s mentor Benjamin Graham in his book “The Intelligent Investor”, trading in the market usually means buying stocks when the market has been advancing and selling them after it has turned downward.
Traders tend to rely on technical analysis and try to predict how a stock will behave by considering moving averages, support and resistance, trend lines, and momentum-based indicators for example. This approach is based on the idea that if a trader can identify previous market patterns, they can form a fairly accurate prediction of future price trajectories.
Speculating basically implies making a bet about a stock’s future price (either expecting the price to increase significantly or sharply decline). Speculators tend to expose themselves to riskier investments in an attempt to achieve above-average returns. As explained by Investopedia:
“Investors and traders take on calculated risk as they attempt to profit from transactions they make in the markets. The level of risk undertaken in the transactions is the main difference between investing and speculating”.
Speculation is either based on long-term or short-term selectivity. As Benjamin Graham puts it in The Intelligent Investor:
Some speculators also bet against a company based on short-term or long-term selectivity. If they expect a company to report poor earnings, for example, they might purchase put options in order to profit from a potential decline in stock price.
Trading positions that are based on a positive outlook for a stock are called “long positions” and those based on bets against a stock are known as “short positions”.
As mentioned in a previous blog post, fundamental analysis strives to identify the intrinsic value and fair price of a stock based on factors such as earnings, expenses, assets, and liabilities. This approach has both quantitative and qualitative aspects.
Investors who prioritize fundamental analysis are often called “value investors”, because they tend to invest in companies that they consider undervalued and underpriced. Value investing often involves holding on to stocks for prolonged periods of time for the opportunity to achieve significant returns, so investors who have this approach may adopt strategies and tactics like averaging down or dividend investing:
Many long-term investors also choose to reinvest the dividends they receive back into the stocks they own. By using Passfolio’s Dividend Reinvestment Program (DRIP), for example, you can have dividends automatically reinvested in the company or ETF that paid you the dividends - this may help compound your return on investment in a stock.
*Dividend paying stocks are like any other stocks, as they may lose value. There are additional risks associated with investing in dividend-paying stocks, including the risk associated with a company’s ability to pay dividends, and risks associated with interest-rate changes, among others.
*DRIP is currently in beta so we are offering it for free until we launch our Pro plan. When Pro is launched DRIP will be disabled until you enroll in Pro. Don’t worry - you will not be charged for anything unless you choose to enroll in Pro. You never have to worry about surprise fees with Passfolio. Please see important information about DRIP here.
No solution is perfect and there is no guarantee that a particular investment strategy will deliver results - remember to choose an approach that best suits your personal preferences and investment objectives.
For instance, if you have a long-term investment horizon and don’t want to spend too much time thinking about your investments, dividend investing and averaging down could be for you. If you’re seeking greater short-term gains and have time to dedicate to perfecting a trading strategy, swing trading could be the best approach. There is no “one size fits all”.
With Passfolio Securities, you can start investing in US stock with as little as $1 - all with no commission fees¹². We make investing in US assets accessible and even accept local deposit methods such as TEDs.
Download Passfolio on the App Store or on Google Play. Find out more at www.passfolio.us
¹ Please see our fractional shares disclosure.
² Securities less than $5 cost $0.02/share. Please see our disclosures on other charges.
Please read important legal disclosures that apply to your relationship with Passfolio.
Passfolio is a San Francisco fintech company democratizing investment opportunities by creating a unified, global, and borderless investment market starting with the United States Stock Market.
Securities less than $5 cost $0.02/share. Please see our disclosures on other charges.
Please see the terms of our referral program.
Please see our fractional shares disclosure.
Please read important legal disclosures that apply to your relationship with Passfolio.
Securities and cryptocurrencies are very different types of assets.
Cryptocurrencies are not securities.
Purchasing cryptocurrencies comes with a number of risks. Please read Passfolio Financial Cryptocurrency Risk Disclosure.
Currency and cryptocurrency exchange services provided by Passfolio Financial LLC (“Passfolio Crypto”), a US Money Services Business registered with FinCEN. Passfolio Financial LLC is not a broker dealer. Cryptocurrencies are not protected by either FDIC or SIPC.
Securities products and services offered to self-directed investors through Passfolio Securities LLC Member FINRA / SIPC. Passfolio Securities, LLC does not provide cryptocurrency-related services. Passfolio Securities LLC is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org.
Passfolio is the brand name of Panchain, Inc. Passfolio Securities LLC and Passfolio Financial LLC are fully-owned subsidiaries of Panchain, Inc.
To purchase securities using cryptocurrencies, you must first convert it into U.S. Dollars using Passfolio Financial LLC. You must then move the U.S. Dollar proceeds to your brokerage account at Passfolio Securities LLC where you can use it to buy securities.
Online trading has inherent risk due to system response, execution price, speed, liquidity, market data and access times that may vary due to market conditions, system performance, market volatility, size and type of order and other factors. An investor should understand these and additional risks before trading.
Content, news, research, tools, market data and securities symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. The information provided should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results and are not guarantees of future results. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. Consider the investment objectives, risks, charges, and expenses of a fund before investing. Contact us for a prospectus containing this information. Please remember that diversification is not an investment strategy without risk, and in certain circumstances, it may not fit your investment objectives.
Certain services (“Services”) offered through our mobile app are offered only in jurisdictions where it is legal to do so. The availability of the Services over the Internet is not a solicitation for or offering of the Services to any person in any jurisdiction where such solicitation or offering is illegal. We reserve the right to limit the availability of the Services to any person, geographic area, or jurisdiction, at any time and in our sole discretion. We make no representation that the Services are appropriate or available for use in locations outside of United States, or that accessing our mobile app is legally permitted in countries or territories where the Services may be illegal. If you access the Services from other locations, you do so at your own risk and are responsible for compliance with local laws. In particular, we are not authorized by the Brazilian Securities and Exchange Commission (CVM) to offer securities distribution services to investors who reside, are domiciled or incorporated in the Federative Republic of Brazil. The Services are not specifically directed to investors who resident, are domiciled or incorporated in the Federative Republic of Brazil and should not be understood as an offer of services directed to such investors.
Investors should consider the investment objectives, risks, and charges and expenses of an Exchange Traded Fund ("ETF") carefully before investing. Before investing in any ETF, you should consider its investment objective, risks, charges and expenses. Contact us at support@passfolio.us for a prospectus containing this information. Read it carefully. ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks. Some specialized exchange-traded funds can be subject to additional market risks. Leveraged and inverse exchange-traded products are not designed for buy and hold investors or investors who do not intend to manage their investment on a daily basis. These products are for sophisticated investors who understand their risks (including the effect of daily compounding of leveraged investment results), and who intend to actively monitor and manage their investments on a daily basis.
Be sure to consider your own financial situation, perform thorough research, and consult with a qualified tax professional before making any investment decisions concerning REITs. Investments in REITs and other real estate securities are subject to the same risks as direct investments in real estate. The real estate industry is particularly sensitive to economic downturns.
Where an investment is denominated in a currency other than the investor’s currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment.
Securities products are: Not FDIC insured · Not bank guaranteed · May lose value
Market data refreshed at least every 15 minutes unless otherwise indicated. Market data provided by Polygon.
FINRA BrokerCheck reports for Passfolio Securities LLC are available at https://www.finra.org/brokercheck.
Trademarks and logos are the property of their respective owners and do not represent endorsements of any kind. Unless otherwise noted, Passfolio Securities, LLC and its affiliates are not partners, affiliates, or licensees of these companies.
Passfolio Securities, LLC
Member FINRA/SIPC
V.07 02/17/2020
