Archives for March 2009

Portfolio Construction: Investment Strategy

The third part that we need for developing your Investment Philosophy is your Investment Strategy. There are two clearly defined strategies for investing; one associated with each of the specific market beliefs.

The first strategy we will discuss is Asset Class Investing which employs an investment methodology that is consistent with the belief that markets work.
The second strategy is Speculative Investing, otherwise known as Active Management. This approach is aligned with the belief that markets fail.

Portfolio Construction: Choosing your Investment Philosophy

The second step in Choosing your Investment Philosophy involves examining your beliefs about the market. Our beliefs, whether conscious or subconscious, are the root of action. Beliefs about the market and how it works are largely responsible for dictating decisions made regarding investments. Formed for many reasons and based on numerous factors, beliefs may be changed instantaneously based on new information or a new understanding. For this reason, it is important to consciously examine your beliefs about the market.
Markets Work
First, let’s examine the efficient market belief.