What are Active Investment Strategies?
There are two types of investment strategies in common use include: Active strategies and passive strategies. In this article, we will only discuss the active strategies and leave the passive strategies for a new article. Active strategies need regular decision about what securities to invest in and how much to invest, as well as the timing of the sale of assets and the reinvestment in new equities. a) Stock selection The investor looks for stock that is undervalued, since this offers the greatest opportunity for growth above the market averages by analyzing the publicly available information, looking for any indication that this stock is undervalued. This type of investor will hold fewer companies in their portfolio so they can stay better informed about each company’s situation, thereby providing for better management. b) Market timing investor attempts to purchase a stock when its value is low, and sell when its value peaks, they are relying on their ability to time the market. Very
