| Stock investment strategies come in many | | | | XYZ Opportunity Fund might be labeled as a |
| forms. For most investors both the form of | | | | small-cap growth fund; while ABC Equity Income |
| stock investment and the investment strategy | | | | Fund carries a large-cap value label. |
| should be kept simple to be effective. Here's how | | | | You have no idea whether growth or value, |
| to keep your stock portfolio on track for long | | | | small-cap or large cap will outperform in the |
| term profits while avoiding investment strategies | | | | future. You basically have four choices: small-cap |
| that often don't work. | | | | growth, small-cap value, large-cap growth, or |
| Often long term stock investment strategies | | | | large-cap value. You decide to invest an equal |
| concentrate on being in the best stock (equity) | | | | amount in four different funds of the same fund |
| sectors or categories over time. Two broad | | | | company, one from each of the above |
| classifications are commonly used to describe | | | | categories. That's the first step in your |
| general equity characteristics: growth vs. value | | | | investment strategy. |
| and small-cap vs. large cap. Over a period of time, | | | | Now comes the important part. Each year your |
| either the growth sector outperforms value or | | | | four funds will perform differently, and some |
| vice versa. The same holds true for small | | | | years the difference will be significant. Instead of |
| company stocks (equities) vs. large company | | | | just holding and having all of your bases covered, |
| equities. If you choose correctly, over time you | | | | you put the rest of your investment strategy |
| will outperform the market. | | | | into action. Once a year you rebalance so that |
| The problem is that this task is easier said than | | | | you return to having the same amount invested |
| done. The bubble that burst in 2000 ended the | | | | in each fund. This means that you will be moving |
| greatest bull market in history. Many small-cap | | | | money from your best performers to your |
| growth stocks grew to be large-caps in the | | | | worst performers. It also means that you are |
| 1990's and many of them traded on the | | | | taking money off the table from the categories |
| NASDAQ. These same equities have yet to reach | | | | that are getting pricey and moving it into the |
| their past highs; nor has the NASDAQ. Some of | | | | areas that are getting cheaper. |
| the growth companies that were on fire for | | | | This is in contrast to many stock investment |
| years now resemble value stocks. They pay | | | | strategies that have you chasing stock sectors |
| dividends, sell at normal or modest P-E ratios, and | | | | when they get hot. The problem here is that by |
| trade without significant volatility. | | | | the time you confirm that a trend is in place and |
| How can you simplify the management of your | | | | buy into it, that trend is likely about to reverse |
| stock investment portfolio to outperform the | | | | and leave you high and dry having bought at the |
| market without relying on complicated stock | | | | top. Unless you want to make a part-time job of |
| investment strategies? First, use equity mutual | | | | trying to out-guess the market I suggest you not |
| funds as your form of stock investment. They | | | | try to predict the unpredictable. Find a long term |
| are classified or labeled for you by fund | | | | stock investment strategy you are comfortable |
| companies and independent sources. For example, | | | | with and stick with it. |