What of these strategies they go on and on about?

Investment strategies are an investor's guiding principle.

They help the investor know what to invest in, and where they would like their investment efforts to take them. They fortify the investor's resolution when they begin to waver, because the market is going through scary a downturn.

They provide the confidence to speak authoritatively about one's investment efforts, and resultant portfolio composition.

Formulating an investment strategy is a personal undertaking. You may outsource it to someone, but that might mean you don't know your own compass, and you wander aimlessly in the investment galaxy.

There are countless blogs about how to formulate strategies and this blog will not rehash a topic so many have discussed to exhaustion. You can read here about Investment Strategies and Speculation as a strategy

I will discuss strategies I have adopted and adapted for my financial needs and goals, therefore, I have some understanding thereof.

Asset allocation is a strategy that looks at spreading one's investment resources across all known and available assets classes, in percentages that are aligned to the investor's goals, and risk appetite, taking into account one's dynamic circumstances over time.
The advantages of this strategy are that your portfolio benefits from the stability of a well diversified position. In seasons of poor performance by some industries, the thriving industries are there to help your nerves, while you ride out the storm. You become a less volatile investor.

I have investments covering most, if not all asset classes, and within each asset class I have sub-strategies.

My equities sub-strategy is income based, meaning that I prioritise shares that pay regular dividend, and I use the dividends to speculate on shares with price volatility and high liquidity, where the aim is to buy low and sell high. 

• price volatility denotes frequent up and down movements of the share price
• liquidity denotes shares that always have buyers and sellers throughout the day's trade

As you can see, this means a small percentage of my overall portfolio is speculative. Timing the market is a gambler's pastime and I use it to inject some life and adrenaline into my veins, otherwise the monotony of the other strategy, in between dividend payments, would be sleep-inducing.

So the speculative side of things involves deciding on a percentage of price appreciation from your entry point to lock your gains and look for the new one to speculate, meaning that you won't try to guess the bottomed out price or the bubble bursting point, and even when you decide to enter you look at where the share price is sitting, relative to the highest and lowest price in the preceding 12 months, and what the split is between the buy and sell offers on the market. 

This is the selection criteria after doing your due diligence on the fundamental aspects of the company you wish to speculate the price thereof. This strategy also takes into account the income element of the share under consideration, as even in speculation it can happen that you need to hold long before you achieve your stipulated lock gains percentage, so during the wait there should still be gains made.

The income side of it involves deciding what minimum dividend yield I want, based on the type of shares on offer. It means checking the historical dividends and their frequency, the growth rate and whether the dividend is cumulative or not.

Get my book and learn about how I formulated these strategies, it's called Senyethe

Buy my other books, as seen on the background image of this blog by emailing reubexg@gmail.com

Her Heart R210.00
His Joy R160.00
Their Hope R185.00
Our Triumph R220.00
All 4 R610.00
Cost of delivery is R50.00 via PAXI or R99.00 via Aramex which delivers to your door (within ZA)

Thank you for reading. Comments and questions are welcome.

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