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Aggressive investment strategy

Aggressive investment strategy

Anyone who is more or less familiar with investing, or at least heard of it, is aware of the basic strategy by which the investor invests most of his capital in low-risk assets, and the remainder, usually 5 to 30 percent, in securities associated with high risk.

 

Using a basic strategy, you invest 70-95% of your portfolio in a conservative or passive way, and distribute the remaining capital to an aggressive investment strategy. We will talk about one of these today.

 

Strategy description

 

Any aggressive investment strategy is based on those assets that with one degree or another probability can take off quite strongly, paying off investments not only in themselves, but also in other risky assets that have not brought anything. Roughly speaking, an aggressive strategy is when you buy shares of 10 companies that have just entered the stock exchange and are relatively cheap, with the hope that at least one of them will grow several times and pay for not only yourself and others, but also allow you to earn.

 

Our aggressive strategy works on approximately the same principle, but is more predictable and less risky, because you will invest not in individual securities, but in mutual funds or abbreviated in mutual funds, partially diversifying risks and "delegating" part of your "authority".

 

How does it work?

 

To begin with, you will need to find a list of mutual funds on an authoritative and honest resource and rank them by profitability. Among the selected, we highlight about a dozen of the most profitable and already among them we highlight the last places, why exactly the last - I will explain a little later.

 

So, you've picked the worst among the best and now it's time to invest in these underdog winners. You distribute all the capital allocated for this business equally to all selected mutual funds and go into standby mode for a couple of months, after which you carry out the same selection and reinvest the capital. Such a strategy will allow you to lose relative to other aggressive strategies quite a bit and earn a lot relative to a conservative strategy.

 

Why the last places?

 

It's pretty simple. The growth of everything that is somehow connected with the market is cyclical, and mutual funds are no exception. Therefore, if the fund is in the first place in the list, then most likely it is now at the peak of its growth and is unlikely to remain at the same level and even more unlikely to seriously increase profitability. As for the worst among the best, such funds can stay at the beginning of their rise and, in theory, show rapid and bright growth after a while. The search for such funds is the main task of the investor who has chosen this investment strategy.

 

Conclusion

 

The strategy of aggressive investing described in the material, although it has a number of positive qualities, is quite risky and this should not be forgotten. Remember that you, as a competent investor, should foresee all possible outcomes and always count on the worst scenario, but despite this to earn. Investments are not sports betting or casinos, but an endless chess game in which the entire world economy plays for blacks.

13.07.2021
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