Investment Methods
Comprehensive guide to 50+ investment methodologies and approaches
Value Investing
Value Investing targets securities trading below their intrinsic value, capitalizing on market overreactions to negative news. Rooted in the principles of Graham and Dodd, it requires patience and discipline to hold undervalued assets until the market recognizes their true worth.
Growth Investing
Growth Investing focuses on companies with above-average growth potential in earnings, revenues, or cash flow. Investors pay a premium for future performance, often targeting sectors like technology and biotech where innovation drives rapid expansion.
Dividend Investing
Dividend Investing prioritizes companies with a strong track record of paying and growing dividends. It offers a steady income stream and potential capital appreciation, often serving as a lower-volatility strategy during uncertain market conditions.
Index Investing
Index Investing is a passive strategy that seeks to replicate the performance of a specific market index. By minimizing fees and trading activity, it aims to match market returns over the long term, relying on broad diversification to manage risk.
Contrarian Investing
Contrarian Investing involves buying assets that are currently unpopular or undervalued by the market consensus. It relies on the belief that herd behavior leads to mispricing, offering opportunities for significant returns when sentiment shifts.
Income Investing
Income Investing seeks to generate a steady cash flow from investments through dividends, interest payments, or rents. Ideal for retirees or risk-averse investors, it focuses on preserving capital while providing regular payouts.
Sector Rotation
Sector Rotation involves shifting potential capital between economic sectors based on business cycle analysis. By anticipating which sectors will outperform in the next economic phase (e.g., Tech in expansion, Utilities in recession), it aims to beat the broader market.
Dollar-Cost Averaging
Dollar-Cost Averaging (DCA) is a disciplined strategy of investing a fixed amount of money at regular intervals, regardless of share price. This reduces the impact of volatility and removes the need for market timing, often resulting in a lower average cost per share over time.
Buy and Hold
Buy and Hold is a long-term strategy where an investor buys stocks and holds them for a long period, regardless of short-term market fluctuations. It minimizes trading costs and taxes while leveraging the compounding power of the market over years or decades.
Fundamental Analysis
Fundamental Analysis evaluates a security's intrinsic value by examining related economic and financial factors. By studying balance sheets, earnings reports, and market conditions, investors aim to determine if a stock is undervalued or overvalued relative to its current price.
Strategic Asset Allocation
Strategic Asset Allocation defines the long-term target mix of assets (stocks, bonds, cash) in a portfolio based on an investor's risk tolerance and goals. It periodically rebalances to maintain these targets, enforcing a "buy low, sell high" discipline.
Tactical Asset Allocation
Tactical Asset Allocation is an active strategy that temporarily deviates from long-term diversity targets to exploit short-term market anomalies or strong sector trends. It adds a dynamic layer to a passive portfolio, seeking to enhance returns or reduce risk.
ESG Investing
ESG Investing integrates environmental, social, and governance factors into the investment decision-making process. By evaluating companies on sustainability and ethical practices, investors aim to generate long-term financial returns while supporting positive social impact.
Thematic Investing
Thematic Investing focuses on long-term structural trends—such as clean energy, AI, or aging populations—that transcend traditional economic cycles. By identifying and investing in companies poised to benefit from these shifts, it aims to capture superior growth over time.
Risk-Managed Momentum
Risk-managed momentum combines trend-following with volatility controls to reduce drawdowns while capturing upside momentum. Ideal for advisors seeking exposure to market trends with built-in risk management.
Systematic Value
Systematic value applies consistent, rules-based criteria to identify undervalued securities while removing emotion from value investing. Strong long-term track record with disciplined selection process.
Quality Momentum
Quality momentum identifies high-quality companies with positive price momentum, combining stability with performance capture. Reduced volatility vs. pure momentum with better downside protection.
Cryptocurrency Investing
Cryptocurrency investing provides exposure to Bitcoin, Ethereum, and digital assets. Highly volatile with unique diversification benefits for aggressive portfolios seeking emerging technology exposure.
Commodity Investing
Commodity investing provides exposure to precious metals, energy, and agricultural products. Offers low correlation with stocks and bonds while providing inflation protection and diversification.
Private Equity
Private equity investing provides long-term capital growth through direct investment or fund structures. Offers attractive returns and diversification from public markets for patient investors.
Hedge Fund Strategies
Hedge fund strategies employ various techniques to generate absolute returns with lower market correlation. Replication strategies offer similar characteristics at lower costs than traditional hedge funds.