Tuesday 27 April 2021
Here are 3 key concepts, 2 key resources, and 1 key action, to help you understand investing styles.
In last week’s email we discussed what an investing style is, and the difference between active and passive. If you’re passive – that decision is easy – buy and hold market indexes, managed funds or broad thematic ETFs. If you’re active then there is plenty of choice about different styles.
Below are a few of the more common – see if you can pick what they are. Answers in the next section.
1. What investing style am I?
- I am looking for companies that are disrupting industries or are in industries that are growing quickly
- Price isn’t too important because I think my investments will grow for years or hopefully decades to come
- A lot of the time the companies I invest in are not profitable, and I’m okay with that
- The metrics I care most about are revenue growth and profit growth
2. What investing style am I?
- I am looking for companies with strong cash flow or profit
- I care a lot about the price I pay for an investment
- Growth isn’t that important to me, if a company doesn’t grow its profit but I can buy the profits it does make at a good price, then I’m happy
- I am looking for companies that I can buy for a discount to the profits they will make in the coming years
3. What investing style am I?
- My #1 investing tool is charts
- I look to time to buy and sell decisions based on what patterns are appearing on charts
- I think that charts give me an insight into investor psychology. I’m looking for key resistance levels – when a share price hits a certain level, I think investors are willing to buy back in or if it hits a certain height, investors will sell out
- Some of the key indicators I look for on charts include: cup and handle pattern, a tower bottom or a morning doji star
- Trying to find what type of investor you might be? Take this short quiz, and this one, to find out.
- It’s more than likely you’ve heard of growth or value investing. They’re two very common styles. Growth investing is a popular choice for beginners who want to pick individual stocks. Here’s a guide to growth investing, to help you get started.
Answers to ‘What investing styles am I?’:
1. Growth investing
2. Value investing
3. Technical analysis
Your investing style will dictate the types of stocks and investments you will make. Have a look at this list of value and growth ETFs to get a sense of what stocks fall under each investing style.
To do this, click on either ‘growth’ or ‘value’ > click on one of the ETFs > click on ‘holdings’ on the left hand side
Community Call Out
Get Started Investing – is all about helping beginner investors break down barriers. The best way to work out what those big hurdles are, is to hear it directly from you, the beginner investor.
So, we’re asking for you to share your story with us. It’s really simple – leave your details or a voice message here, so we can get in touch about being on the show.
We really want to hear from you, so don’t be shy – and remember there’s no such thing as a stupid question.
Some of our favourite resources and offers to help you during your journey:
- $50-$200 OFF some amazing investing courses by our friend-of-the-show, Owen
- Track your investment portfolio with Sharesight.
- Get a free stock when you sign-up to Stake, using the code EQUITYMATES
- Get exclusive access to our favourite data and insights platform, TIKR
- Take the emotion out of investing in Bitcoin, Ethereum, Gold and Silver with micro-investing app, Bamboo. Use EQUITY MATES for $10 when you sign-up
- Get $15 of Bitcoin, using one of our favourite crypto-currency exchanges, Swyftx