Finding the best investing strategy is not difficult if you keep things simple.
A novice investor recently asked me what I thought was the best share investing strategy to follow. I hesitated for a bit and then admitted that there is no right or wrong strategy -- just one that suits you.
To prove my point, I told him about some shares I had bought in my earlier investing days. They were an eclectic mix of value, growth, recovery, and a bit of high yield thrown in for good measure, too. These included fast growing cable company Global Crossing, which has since gone bust, US media giant Viacom
(NYSE: VIA)
, Trafalgar House, Costain and British Airways
(LSE: BAY)
, which was one of the highest yielding UK shares at the time. Other shares that made it into my portfolio were SmithKline Beecham, Marconi and Sycamore Networks
(NASDAQ: SCMR)
.
Today, my share portfolio could not look more different. It is weighted heavily towards high yielding shares that include British American Tobacco
(LSE: BATS)
, British Telecom
(LSE: BT.A)
, Royal Dutch Shell
(LSE: RDSB)
and Barclays
(LSE: BARC)
.
Question is, why has my investing strategy changed?
Quite simply, when you first start investing you are presented with a plethora of choices. What's more, every investing strategy seems to feel right. Consequently, you end up owning a mishmash of shares that have been bought for different reasons. Some may have been bought because they appeared good value, while others made their way into the portfolio because they exhibited promising growth.
But what's wrong with that?
In theory there is nothing wrong with any of the accepted strategies. After all, Warren Buffett is a very successful value investor and there aren't many better exponents of growth investing than Peter Lynch. But you rarely find successful investors straddling two or more investing strategies.
As I see it, what investors need is focus. Almost certainly for anyone starting out in investing, it can be best to keep things simple in the beginning. And by learning just one strategy you can concentrate on identifying shares that fit in well with that investing style. Apart from reducing the amount of learning you need to get your head around, it will also significantly cut down the number of shares that you need to analyse.
Another thing to bear in mind is that you are unlikely to beat the market if you try and adopt too many different investing styles at the same time. What you may end up with is a hotchpotch of shares that may at best just match the market. So to be a market-beating investor, it is probably best to find a suitable investing style and develop it to suit your personality.
> Why You Need An Investment Strategy
