Investment Strategy
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In theory investors benefit from holding portfolios of investments rather than single investment vehicles. Without sacrificing returns, investors who hold portfolios can reduce risk, often to a level below that of any of the investment held in isolation. Individuals are not required to own diversified portfolios and are typically not prohibited from short sales or margin trading as are some institutions. Therefore most beginning investors favor smaller investments with less risk, therefore risk-adverse. Whereas senior investors may take on higher levels of risk and diversify much more. There is much risk involved with the stock market and investment decision shouldnt be taken lightly.
Most investors favor an active approach to common stock selection and management, despite the accumulating evidence from efficient market studies and the published performance results of institutional investors. The reason for this is obvious – the potential rewards are very large, and many investors feel confident that they can achieve such awards even if other investors cannot.
The most traditional and popular form of active stock strategies is the selection of individual stocks identified as offering superior return-risk characteristics. Such stocks typically are selected using fundamental security analysis, but