Has any philosophy performed better than all the rest consistently( value, growth, etc)? Do investment firms rigorously conform to one philosophy or do they do their own thing(and how successful are the ones that follow method compared to ones that do not)?
2007-01-30 12:13:37 · 6 answers · asked by Matt C 1 in Business & Finance ➔ Investing
Choosing one area (i.e. value, growth, international, etc.) is very risky as the "best" place to have your investments changes every year. For example, during periods of economic downturn, bonds and other fixed investments actually produce better returns than other investments. Of course, there are other years when stocks outweigh the fixed. If you chart each "type" of investment each year, ranking them from highest return to lowest (which there are charts like this out there-- I cannot seem to find one right now), the investment types jump all around.
Therefore, the *best* philosophy is diversification across all types of investments. In the chart described above, a diversified portfolio will never be the highest return, but it also won't be the lowest return.
I agree with the "buy and hold" strategy, but there needs to be some sort of rebalancing to your portfolio, or eventually, everything will be out of whack.
Index funds are fine for simplicity, but diversification is still needed. However, a properly diversified portfolio of mutual funds can beat an index in performance with minimal or even less risk than an index.
2007-01-30 13:03:33 · answer #1 · answered by Jodi F 2 · 0⤊ 0⤋
Investment philosphy with best track record - Buy and hold companies with good value at a reasonable price. (per 2 of the world's most successful investors, Peter Lynch and Warren Buffett). For about the last 50 years, value stocks have been found to do better than growth stocks, but that does not mean they will do better in the future.
2007-01-30 20:45:52 · answer #2 · answered by gosh137 6 · 0⤊ 0⤋
I think the answer to your question is that you have to pick your spots. When it's time for value (when a stock is cheap on a valuation basis), then it's time to be a value guy.
When a stock is beaten-down for no good reason, it's time to be a contrarian.
When it's time to buy a stock because it's earnings are growing, it's time to be a growth guy.
If I had to pick one, I would go value. You pick up great companies that way on the cheap and that almost always makes you money. I always keep 5-10k cash to swoop in on companies I think are cheap (right now NJ, CHL, NFLX, AAV) and it works out great.
Good Luck!!
2007-01-30 21:20:49 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Contrarian Investing. Look up David Dreman
2007-01-30 21:31:00 · answer #4 · answered by Inamra 2 · 0⤊ 0⤋
Sit on an index fund.
As a matter of faxct, there can be no answer to your question. If there was a known way with the best rtack record... everyone would invest according to that strategy, which would rob it of the lush returns.
2007-01-30 20:29:44 · answer #5 · answered by Peaches 4 · 1⤊ 1⤋
small value and generally all international has outpaced most other categories over the last 5 years or so.
2007-01-30 21:13:42 · answer #6 · answered by keepingitgoing 2 · 0⤊ 0⤋