INVESTMENT STRATEGIES

Investment strategies

Part A: Investment strategies

Introduction

It is the dream of every investor in the market to become super investor and he invests a huge amount of resources and time in this regards. As a result, there are several sales people who offer their goods by using magic strategy to make investors their easy prey. Therefore, despite the efforts made by the investor he fails to gain the position he considers himself for and become average investor of the market. However, investors keep on trying to achieve his goals and try to become another Peter Lynch or Warren Buffet which are legends of investing and are regarded as super investors. It is found that most of investors read the material written by those legendary investors to find the clue for the strategy adopted by them and use the same to become wealthy in a rapid pace.

Therefore the philosophy of investment is related to rational thinking of markets, most of times thinking of how market works and various types of errors that investor makes that is considered as the base of investors behaviour (Reilly & Brown, 2012, pp. 3-15). There is a question for considering the mistakes of investors; it is undertaken as in designing investment strategies, advantages are carried out from errors of investors for pricing stocks which is made by all or some investors.

All investment philosophies base on the main idea about human behaviour, market efficiency, and strategies and tactics. All of them are discussed in later part of the report.

Discussion

To become investor, the first and foremost idea is to consider oneself ready for the investment. It all bases on knowing oneself whether he or she is ready or not? It is fact that every individual have different conditions and requirements for future and for now. But, if someone wants to invest, he or she needs to consider these factors before investing.

Investor needs to thinks about the money he owns or need to think if he wants to invest his family member's money also. The consideration he should make includes; thinking about any dependants who depends on investor's money; if investor is free with his money and doesn't have any dependants; the tax patterns after investment; and importance of tax for investor conditions.

Before considering for investment, potential investor should collect all relevant information that is required for his or her knowledge. This information may be found in annual reports, policy papers and annual statements of business. Interest rate should also be considered before investment and other fees, charges and past performance patterns should also be undertaken by the potential investor. Another consideration that investor requires is to prepare and check his periodic budget and understand that whether he is able to manage the money after investment. For instance, if there is any money that is left after monthly budget, than it is more likely for him to invest (Davis, 2003, pp. 120-135). An investor need to think about that the similar circumstance might change after investment ...