Image via Wikipedia
There are generally two types of investment styles: strategic and tactical.
Strategic allocation is usually a buy-and-hold strategy.
The initial asset mix is developed after establishing the investor’s goals for growth, capital preservation, income, etc. Once in place, the portfolio’s values will “drift” within the initially established mix. That means the growth portion may be making great gains while the income assets are declining in value.
Re balancing is part of a strategically allocated portfolio. There are a couple ways to re-balance. For example, one technique is to purchase more of the declining asset class. In the example from above that would mean adding more to the income positions.
A second way is to reconfigure the portfolio is to liquidate a portion of the assets. This normally occurs when an investment class moves a certain percentage above its original value. For example, if the growth portion of the portfolio was 8% above its original value a portion of the growth assets would be sold. There is no “carved-in-stone” rule on the percentage, but it is usually predetermined at the portfolio’s inception.
Tactical allocation is less rigid and has no fixed time period as the buy-and-hold strategic investing model. The tactical model is more for opportunists looking for a chance to capitalize on an unusual occurrence. For example, if the semiconductor space was making fresh highs a tactical investor would want to invest in that space.
The tactical approach is more active and has a market-timing component. It also requires restraint and discipline. The strategy requires monitoring the market for opportunities. Once those investment opportunities are showing signs that they’ve “run their course”, the investor must have the discipline to move on to the next promising area.
My style of investing is tactical. I don’t want to buy and hold, hope and wish, or watch my capital decline for the sake of a balanced asset mix. I want to buy the leading stocks in the best performing sectors.
One of the tools that lets me recognize opportunities is TeleChart. Here’s how I do it –
Under the WatchList tab is the Custom Date Sort. I click on Custom Date Sort and draw a beginning an ending date on one of the major averages.
Once “Ok” is clicked on the Custom Date Sort window, TeleChart automatically recalculates the data for my time period.
To see which areas of the market have outperformed the S&P all that is left to do click the drop down arrow next to the name of the current scan view. The current view is called Charts With Notes — the small down arrow opens a bigger window and it’s easy to find the Morningstar groups. Click on the Morningstar groups link and TeleChart will sort those industry groups by performance for the same time period as the S&P.
This window shows the Industry groups sorted for the selected time period. I sort from high to low, or low to high. My objective is to find the best performing sectors because I want to invest in the strongest areas with the strongest stocks from those areas.
Now that I know the top-performing sectors I can find the best performing stocks in each sector.
TeleChart makes tactical investing an easy, quick, and effective investment strategy.
Similar Stock Trading System Posts:
- A Trading Tip To Improve Your Results photo credit: ilamont.com This trading tip can make a huge...
