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What are your investing strategies (with examples)?

What are your investing strategies (with examples)?
My investing strategy: Buy good quality assets at a low price....hold for a very long time unless the the quality of the assets deteriorate substantially.
My strategy is driven by my portfolio plan. For instance, I have a one portfolio that is dedicated to generating income in retirement. There is a taxable, IRA and ROTH section but all are managed to generated current income. This is done using good value stocks generating dividends, a bond ladder and some covered call options. and sending me a monthly check. Like, you know, an annuity.
In total, I manage 5 different portfolios and each has a different plan. Munging everything together would be impossible since the strategies for each is different.
Depending on the size of your portfolio(s) and plans you may have more or less but it makes managing the total picture easier.
One element is dividend reinvestment. in both dual equities and funds. This presently represents about 75% 0f cash needs from the IRA (but will decrease when RMD's kick in). Another is basic balance; at my age, 69, I'm 67% stock, 25% bonds, 8% cash. I will reduce the equity portion as I age. And there is a small cache of precious metals for worst case scenarios - maybe a year's worth. Supporting this is an estate plan and trust, which can guide the children, in the event.
Then, there is the constant lookout for opportunity; did quite well in 2008 and beyond scooping up bargains like V and MA. Thus, the need for significant cash to not only cover retirement expenses, but also allow flexibility to pick up stock when on-sale.
This may not be a good plan for you if you are in the accumulation stage. Although, I think taking advantage of DRIP is good for everyone over time.
My strategy is not a single strategy. I'm going to be brief because I need to get the garbage out, I'm tired.
Ten things
1) Buckets by risk, buckets by how soon I'll need the money.
2) Rules by IBD for middle term buckets and most trading (sell if down from purchase price greater than 8%)
3) Try to buy the best companies in any given category
4) Diversify as necessary, but avoid categories that are due to get creamed (such as mid-longer bond  funds currently)\
5) Invest internationally as well and don't get too hung up on exchange rates
6) Do most all trading in IRA/401K, no need to take into account muddling tax factors
7) Don't be afraid to pursue hot sectors and stocks if they have true momentum
8) Don't avoid arbitrage situations, don't shy away from $800 gains in a few weeks kind of things. If an ETF is closing out or a company is being bought out and there is current discount, do it.
9) Use income to grow your wealth, hold winners that are good solid companies or funds
10) Enjoy what you do. (If not, seek a good investment person for a low rate.)
My investment approach/strategy has evolved significantly over the years as my goal changed from "making a quick-buck with short/mid term bets" to "investing for predictable outcome over long-term". The biggest change is that, instead of concentrating the portfolio on a few individual stocks, I now mostly depend on broad, passive index funds. I am somewhat obsessed with asset-allocation (making sure that I have the right mix of asset classes that meet my financial goal), diversification (using a variety of sub-classes within a specific asset-class) and risk management.
  • I use low-cost passive ETFs for broad market (e.g., VTI and VXUS to cover the global-spectrum)

  • I use low-cost passive ETFs for boosting small, value, selective regions, etc. (e.g., VBR, VSS, IEMG, etc.)

  • I have some high-yield components in smaller amounts (AMLP, BIZD, VNQ/VNQI, junk-Bond funds)

  • I have individual Bonds for predictable return of capital (the coupons preserve the purchasing power over the target inflation)

  • I have some hard assets (e.g., physical gold) for extreme crisis situations
With the above set-up, my core portfolio requires minimal supervision/monitoring, other than occasional re-balancing and taking tax-loss opportunities if one of my core holdings tumble.
I leverage the stability of my portfolio by selling low-risk options using up to 25% of my account balance as margin collateral. Each individual trade has high-probability of a small profit - but many such trades accumulate a reasonable boost to my portfolio yield. I manage my risk very carefully and take losses early if things go completely unexpected. So far this has worked well.
I agree with all of the comments on a buckets/portfolios approach - different investments for different time periods.
I would also offer that while tax planning is an important consideration, it is secondary. That is, I try to maximize my investments first, then minimize the taxes that I must pay. I try not to let tax planning be primordial.
Good luck & great profits!
You can make money in any market. Many stocks, funds, bonds, MLPs are uncorrelated. That means you can sell something that is way up to buy something that is way down.
Bogle - Market Returns (9.8%)
Start with market returns. This means buying a total stock market index (like VTI). Note total index tracks the S&P 500 within 2 basis points and is more diversified. Just buy and hold this and you will outperform 85% of investors. Pay attention to when you need the money so you don’t have to sell at a loss. Move investments you need in 5 years to something less volatile (Bonds, CD ladders, high yield savings). Over 5 years the total market index has a significant asymmetric risk. I like THOPX for bonds right now because it has made 5% over the last 10 years (beating inflation).

Buffet - Buy Value (> 20% upside)
“Be fearful when others are greedy and greedy when others are fearful.” Buy great stocks at moments of max pessimism. That is stocks that are undervalued. This creates a condition of asymmetric risk where the upside is much bigger than the downside. How I define undervalued:
  • P/E < 10; ~16 is average

  • Stock is down > 20% for the year

  • Still showing earnings growth

  • Some negative news came out that the market has overreacted to.
I buy and hold until they hit a target. I never sell at a loss. However, if after two years it has not gained 20% (roughly market returns). I sell at break even or better. Here are some examples this year that I bought and sold:
  • SNAP 22% gain
    • Bought 1/12 and sold 2/7. That is an effective yearly rate of (22%/26 days) * 365 days = 309%.
  • TWMJF 28% Gain
    • Bought 2/2 and sold 3/21. That is an effective yearly rate of (28%/47 days) * 365 days = 217%.
Basically, as soon as I buy it I put in a limit order for my target based on its high during the last year. Here are some other investments that haven’t hit their target this year yet.
  • MO (5/9) up 5%
    • P/E = 10, bought at $55, high this year of $72, DIV 5%
    • Who doesn’t like beer?
  • TAP (5/10)
    • P/E = 8.92, bought at $61, high this year of $95, DIV 2.69%
    • Wine and Cigars…
Some I am holding indefinitely (bought them when they were down):
  • FB (3/19) up 8.24%

  • BIDU (12/13) up 15% - The Chinese Google.
Dividend Focus

When the market is high (P/E > 16; currently 24) I buy some dividend stocks and put a sell order at a target price. In the meantime, I collect and reinvest dividends. I like dividend hunter, but still buy low PE and dividend stocks that are down. Here are some examples:

  • UNIT (12/19) up 21% with a DIV of 12.49%

  • BPT (12/28) up 22% with a DIV 16.08%
    • Trump messes with international affairs and oil goes up.
So there are ways to make money in every market. Watch things you are interested in and wait for them to hit a value target. Sell them when they reach your growth target. Never sell at a loss. Very few good companies go out of business. If you buy them when they are down you will seldom lose money. Be patient and emotionally mature. My 20 cents…
I've changed over time and now trade a variation of a Covered Call almost exclusively.
1) Sell a Cash Secured Put (CSP) on a stock you wouldn't mind owning and feel will stay stable or move up in price.  Keep selling these over and over to collect the premiums unless, and until, the stock is assigned.  Track the premium which I look at lowering the net stock cost.
2) Sell Covered Calls (CC) with a strike above the net stock cost.  If the stock is not "called" then continue to sell over and over until it is.  Again, track the premium and add it up to continue to lower the net stock cost.
3) Once the stock is called start over with #1.
There are two main risks to this strategy.
- The first is that the stock drops significantly and is assigned at a point much lower than the strike price or drops after you are assigned.  This can be mitigated by the put premium already collected, plus the call premium from CCs, which can lower the net stock cost.  CCs can be sold even below the net stock cost, however these need to be managed and rolled as the stock price moves back up.  The goal is to sell CCs over the net stock cost, so if called you make an overall profit.  With patience and attention, I've never had a stock price drop that couldn't be repaired to at least break-even.  However there may be times when the stock is so damaged and has no hope of recovery, that it needs to be sold for a loss, but if picking the right stocks this should be rare.
Note that this risk is no different than if you had bought the stock outright.
- The second risk, which I do not actually consider a risk as it still makes a profit, is what I call "the one that got away" where the stock jumps up quickly and is called from you at your strike price.  The trade still makes a nice profit, however you may feel you missed out on this additional profit.  Personally I never lament any profit, and many times could have made more, but just let it go and move on to the next trade.

Some things to consider:
- Avoid earnings for the short Put.  Either close the put, or trade with an expiration date prior to the ER.
- Don't be married to any stock.  If you won't let it get called from you then you will likely lose money trying to "save" the stock.  Just let it go, you can always buy more of this stock.
- If you own the stock look for dividends, which can lower the net stock cost even more.
- Be patient!  Many who report problems with the CC strategy get impatient and close the CC for a loss instead of letting it be called.  Or close a stock that dropped too soon and not collect enough from the CCs to bring it back to profit.
There are no zero risk option trade strategies, and this is a pretty boring and repetitive method, however your overall risk is no more than just buying and holding a stock outright.
You asked for an example, so this is what an ideal trade looks like.  All numbers made up and no commissions or fees are included.
* XYZ stock at $50
* Sell $45 strike CSP for $0.50 that expires, then others for .45, .47, .43 for a total of $1.85 (or $185 total) collected.  Note that you may never be assigned and just make a nice profit collecting these premiums.
* Stock assigned at $45, or a net stock cost of $43.15.
* Sell $50 CCs for .25, .30, .28, .22 for a total of $1.05 ($105) lowering the net stock cost down to $42.10.
* Stock moves up and is called at the strike price of $50.  Profit on the transaction is $50 - $42.10 = $7.90 or $790
I am going to have to study this magic in more detail. So far I have avoided options.

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