Choose a strategy

To keep the risk as small as possible and to protect yourself from emotions while investing, you can draw up an investment strategy. Making a plan in advance has the advantage that you only buy shares that fit within your strategy which allows you to take any losses for granted.

We have already defined the most well-known strategies in PDT:

Value Investing

Value investors try to find the intrinsic value of a potential investment and then wait for it to sell for (much) less than that specific value. In essence, value investing is buying investments as soon as they are on sale.

Growth Investing

Growth Investing is a Buy-and-Sell strategy. The way you make a profit is by selling a stock for more than you originally bought it for. So, you have to determine two moments: when you buy it and when you sell it again. Because you quickly get into companies without profit, this is a riskier investment. Some research is required before you get into this type of investing.

Tesla, Just Eat Takeaway.com

Dividend Investing

A dividend is a distribution of profits from a company to its shareholders. The main reason for dividend investing is the income from a share. By directly reinvesting this income, a so-called compounding effect (interest on interest) is created. When you receive your desired dividend income you can pay it out to yourself, for example, because you want to stop working early in life.

Shell, Unilever

Buy-and-hold investing

With a buy-and-hold strategy, you never want to sell your shares again. This makes it very important to select good companies, which will be active for more than twenty years with a strong competitive advantage. Understanding the product or service, therefore, is very important. Long-term diversified ETFs can fall into this strategy.

Coca-Cola, S&P All World

GARP

Growth at a Reasonable Price (GARP) is an investment strategy that combines principles from both growth and value investing by finding companies that show consistent earnings growth, but that you don't expect to sell at extremely high valuations. The term was popularized by legendary investor Peter Lynch.

Amazon.com, Apple

Swing trading

Investors with this strategy look for stocks that are expected to see significant price movements. By looking at trends in the price, you try to spot the off and peak moments and take a long or short position there. This form of trading requires a high level of discipline to be successful.

Momentum investing

With momentum investing you look at the popularity of the company. In a short time, popularity can rise and gain momentum. This is similar to growth investing, but your buying and selling is often linked to faster momentum. Because profits (or losses) are made for a short time, this is a risky strategy and you should actively follow the company.

Game stop

Core investing

Core investing is part of the Core-Satellite investment strategy. With the core, you focus on passive investments that follow a market index, such as the S&P 500. Extra positions, also known as Satellites, are added to the portfolio with self-selected securities. It is designed to minimize costs and volatility while providing the opportunity to outperform the broad stock market as a whole.