Types of Investment Strategy in Equity Market

  • Jan 19, 2019 AEDT
  • Team Kalkine
Types of Investment Strategy in Equity Market

Generally, the public does detailed planning for their office work, or a vacation, buying a new brand car but they regularly disregard the most arrangement required task which is investing. Investing without any proper plan is like a cricket team going for an international game without any practice and a playbook. Creating and applying an investment strategy is a secondary step but before that, we must understand what kind of strategies are available, and after that, we must do an in-depth study on them then only, we can make a successful investment strategy.

Investors must understand the full potential of investing and its rewards which comes with it then only he/she can make a suitable investment strategy for themselves.

Various investment strategies fulfill the different investment objectives; the major achievement is to make the right strategy with the right objectives. Some of the investment strategies are:

  • Value Investing
  • Income Investing
  • Growth Investing
  • Small Cap Investing
  • Value Investing: This investment strategy is very popular in an Investment world. It was made popular by Benjamin Graham and Warren Buffet. The basic principle behind this investment strategy is to buy those stocks which are cheaper than or below its intrinsic value. For finding stocks which are undervalued needs lots of fundamental research. And once it’s done then, investors get the stock which is undervalued, but it usually takes a long-term for the stock price to rise above its intrinsic value. This investment strategy needs patience, but still, it needs the investor to make a right call while investing in a stock and after that investors can have a handsome payoff on it.
  • Income Investing: In this strategy, investors buy those stock which generally payout returns on a regular basis. In this, investors look for those stocks which primarily gives dividends on their stocks to its equity holders. In this strategy, investors look for those stocks which pay high dividends like the utility sector, although it’s not an ideal way of investment still investors invest in this way for certain fix income.
  • Growth Investing: In this strategy, investors focus on capital appreciation. In this investors buys those company stocks that shows signs of an above average growth, through its revenue and profits growth. Investors still buy those stocks which show this kind of growth without confirming whether the stock is expensive or not. In this investors invests in smaller companies which shows great potential for growth such as Boral Limited (ASX: BLD), carsales.com Limited (ASX: CAR), Tabcorp Holdings Limited (ASX: TAH), Bank of Queensland (ASX: BOQ), etc.
  • Small Cap Investing: This investment strategy is suitable for those who are willing to take a risk on their portfolio. In this, investors invest in the stock of small companies with smaller market capitalization. In this, market capitalization usually lies between $300 million and $2 billion. Investors can be mesmerized by the small-cap companies due to their ability to go unnoticed. More experienced stock investors should only invest in small-cap companies due to their volatility and in this type of companies usually doing a trade is a difficult task. There are many financial companies like Kalkine: Equities Research Firm which offers their advice on small-cap stocks to investors and helps them to decide whether they should Buy, Hold, or Sell the stocks. Some of the small-cap companies are: Great Boulder Resources (ASX: GBR), Battery Minerals Ltd (ASX: BAT) and many more.

Finding a suitable investment strategy which suits your temperament and goals are very hard, but still, it’s not impossible. It will take some time to grasp things but slowly you will build up the tendency and according to that investors will pick up the strategy and start applying it for better returns.


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