Investment Strategies For Guaranteed Success | Personal Finance Views

Thursday, August 21, 2014

Investment Strategies For Guaranteed Success

The copycat strategy definitely has its own pros and cons, but if you combine your own intellect into it and follow the successful investors, you will be a lot more successful with your investments.

When it comes to investments people want to play safe, but would not compromise on the returns they expect in any way. Copycat investing, as can be deduced from the name, is basically using the investment strategies of those who have been successful with them, in planning your own investments. This is also called coattail investing, as the investors follow the those who have already proved themselves with astounding investment gains. Whether this is a viable option for you needs a serious thought and a lot of research. It is not a standard formula to get success with investments you make but offers a basic framework around which you can design your investments. In any case it offers the opportunity to learn from the mistakes of others and capitalize on the goods.

Investment Strategies

Mixed Evidence – Follow copycat or not

Investors whether new or old must be aware of the name Warren Buffet. The success story of Warren buffet has attracted many investors and a lot of them have religiously followed the Buffet’s strategy and have been successful in making lots of money. One of the studies shows that several bad credit loans investors made investments in the Berkshire Hathaway’s investments once they were announced only to find that it even left behind the S&P 500 average.

Well, there are always the related aspects of any decision and before you get on to the copycat strategy and start looking for the current Buffet’s portfolio or the strategy followed by him, here is a brief eye opener for you. Bill Miller was an investment manager and came to great fame when hi Legg Mason Value Trust Fund outperformed S&P 500 for continuous 15 years, beginning 1996 till 2006. However, what came after this was a major setback. In 2007, Millers fund lost 7%, while S&P 500 advanced 5% during the same time period. The next year 2008, which was also marked by the recession, came as a complete disaster for the Millers fund, which sank by 55% as compared to the S&P 500 which managed to hold it at a 37% loss. So if you were to be a copycat who blindly followed Millers strategy, there are all the chances that you would have ended losing your complete investments in 2007-08.

Copying the Copycats

This type of investing has been there and has been followed by the several investors, including the institutional investors who deal with the public money like the mutual funds and the hedge funds. However, the idea is more popular amongst the retail investors who get a ready-made investment strategy, they use as a go-getter for the investments they want to make. In fact, one of the studies reveals that the copy trading is part of the topmost management trends in the recent years.

Copy cat investors are getting smarter by the day. They have been found regularly checking on the inclusions by the mutual fund no credit check loans company and the decisions of the fund managers and then copy the same in their investments. In the age of online investments, there are several research based companies which offer latest updates on the holdings and portfolio of the best performing funds and the investment managers. These sites are hugely popular amongst the retail investors and they often buy subscriptions for sending the regular updates and suggestions which are research based to them.

Who Should You Copy?

Investors need to be extremely cautious about the copycat decisions they make as they are going to impact their investment returns and define their life. Here are certain places where you should copy from:

Successful fund managers: All professional fund managers with over $100 investments are required to file quarterly an SEC Form 13F which specifies the details of their investment holdings. This provides a good amount of information for copycat trades. There are a lot of places where you can catch hold of this data and it can serve as a major source of investments.

Buy-and-hold managers: If you are a long term investor, it makes a lot of sense to catch hold of the investment decisions made by the investment managers who follow the strategy of buy and hold, wherein they would park the funds in the holdings for a fairly long term. So, following the famous adage by the investment baron, Warren Buffet, one of the best investment strategies to the hold the investments for ever.

Use of social media sites: Social networking sites help a great deal in keeping yourself with the recent updates and the investments by the aggressive investors who create a ripple in the market with their investment decisions, although short-lived. So if you are looking for quick returns you can always follow them.

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