Tuesday 1 January 2019

Investment strategy

An Investment strategy generally there are two types, namely, the strategy of active (active strategy) and passive strategies (passive strategy). There are two strategies you can take investors in portfolio formation, i.e. as follows.

Passive Strategies

It is the actions of investors who tend to be passive in investing in stocks and just basing. The movement of its shares on the movement of the index market. A passive strategy is based on the assumption that:

  • The capital market misprinting are not doing, and

  • Although the misprinting occurred, the financier argued that they could not identify and exploit it.

The purpose of this passive strategy is gaining a return portfolio of market index return with minimal stress the possible risks and costs of investments which must be issued.

There are two kinds of passive strategy that is as follows.

  1. Strategies to buy and save the point is investors purchase a number of shares and keep holding it for some time. The purpose of doing this strategy is to avoid transaction fees and other additional costs that are usually too high.

  2. The strategy follow an index strategy is described as purchase instruments mutual funds or pension funds by investors. In this case investors hoping that the performance of its investments on a collection of stocks in the Fund is already a duplication instrument of performance index of the market. In other words, investors hope received a return comparable to return of the market.

Active Strategy

Is the action the investor actively in the conduct of the election and of buying and selling stocks, looking for information. Follow the time and stock price movements as well as various get return abnormal. The purpose of this active strategy is to get a return. That exceeds the return stock portfolio stock obtained from a passive strategy. There are three commonly used investor strategy in carrying out the strategy of active stock portfolio.

The selection of shares means investors are actively conducting an analysis of the selection of the best stocks, i.e. stocks which provide the highest-level return and risk are best compared to the other alternative.


This analysis basing on fundamental analysis approach in order to find out the prospect of a stake in the future.
b. sector Rotation, meaning investors can do this strategy in two ways, namely, as follows.

  • Investing in stock shares moving on specific sectors to anticipate cyclical changes in the economy later in the day.

  • Undertake modifications or changes to the weighting a portfolio of stocks in different industrial sectors.

  • State that the price momentum Strategies in stock market prices of a particular time will reflect the movement of the earning or the growth of the company.

In this case the investor will be looking for the right time. At the time the price changes that occur can provide the level of profits for investors through the Act of selling or buying stock. Argues that in the real world there is no efficient market perfectly. One of the reason is due to the participation of retail investors in investing often involves emotions, affected the atmosphere, and others.

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