Investment Strategies

Another day in investing paradise, or hell? It depends on how you look at it. Volatility in the last few weeks has been absolutely off the charts. Blue chips moving a few percent up, followed by a similar move downwards the next day, just to be repeating the same pattern a few days later. It is those times when you realize that short-term the market is nothing but a casino: bet on red one day and black the next. Does it have any relevance to investing?

The current oil price is a fantastic opportunity. In fact, if you have a car, you can kill two birds with one stone. Well, not really kill, but you the currently low oil price is a win-win situation for most of us. We get richer twice: once through filling up our cars and second through the great middle and long-term investment opportunity the low price is presenting.

A few years ago, just after moving to France, I invested in one of their corporate powerhouses. While I anticipated no great gains from the investments, I made the choice to invest € 10,000 in the company for another reason: dividends. Within only a few months, however, I had lost € 5,600. The company I bought was, and still is, one the biggest global telecommunication companies, France Telecom. Did I anticipate a loss of over 50% of my initial investment? No. Was I bothered about losing all that money? No.

Would you like to earn 5 to 10 percent per year in investment returns? It’s easy right now. An opportunity not to be missed.

Sounds like one of those advertisements for a risky unreal investment, doesn’t it?

“Hey, watch, listen, I’ve got an unbelievable offer for you. A secret no one knows about, just you and I. So give me your money. Just invest all your hard-earned cash in my fantastic secret and become rich. … well, maybe not, but at least I will fill my pockets. Hohoho.”

How to build wealth? Whether your goal is to have enough for a retirement nest egg or millions to enjoy the fabulous lifestyle of the rich and famous, the process is always the same: 4 simple steps.

If you asked your grandparents about growing up in the mid to late 20^th century, especially those who had experienced the tough times after World War 2, the most common advice you will hear is 1) work hard 2) spend less than you earn 3) save.

The limitations of stock market predictions

A major advantage of long-term over short-term investing also lies in the reduction of the psychological pressures that come with trying to make sense of why stocks move in a certain direction. Picture yourself sitting in front of your computer or television screen trying to anticipate and react to every news feed that pops up on your screen. It is like reading a crystal ball. The overload of information fuels a feeling of distress if predicting the market is the core business model of your investment career.

Are you in it for the long run or the quick buck? That’s the question you as an investor have to ask yourself before putting your money to work. Just like the hare and the tortoise, a steady pace will often outpace the rushed approach.

In fact, there are various ways of investing your hard earned cash; from speculative to risk-averse, from seconds to minutes and days to years. Some investing strategies even combine the advantages of the pace of both hare and tortoise. Whatever approach you favor, there are advantages and disadvantages.