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PR Newswire
19-12-2023, 09:19 AM
Every time you buy a stock thinking that prices will go up, there is someone on the other side selling thinking that it will go down. Only one of you can be the winner. What do you have that will enable you to be the winner? In other words what is your investing edge?
In the old days, information can be an edge. But with the advent of the internet and more regulation about insider trading and transparency, I am not sure whether information can be an edge anymore.
Of course, if you have specific industry or technology expertise, this could be a type of information edge. But how many retail investors have this? Even if they have this, how many will stick to the field they know?
There was a time that you could have an analytical edge. Even this is disappearing among the retail investors. There are tons of online sites offering analysis of companies – both technical and fundamental. And there are many affordable investing courses to develop your analytical skills.
After spending years looking at investment case studies, I have come to the conclusion that my edge is my investment horizon. I hold onto stocks for years and my annual stock portfolio turnover is single-digit.
Most of the case studies – even those based on fundamental analysis – cover much shorter time horizon. I can understand that if you are a technical investor, you would have a short investment horizon. But I was surprised that many fundamental investors focus on short term fundamental signals eg earnings surprises, changes in interest rates, announcement of new products.
Moral of story? You better figure out your investing edge if you want to be a successful retail investor. You cannot rely on luck all the time.
In the old days, information can be an edge. But with the advent of the internet and more regulation about insider trading and transparency, I am not sure whether information can be an edge anymore.
Of course, if you have specific industry or technology expertise, this could be a type of information edge. But how many retail investors have this? Even if they have this, how many will stick to the field they know?
There was a time that you could have an analytical edge. Even this is disappearing among the retail investors. There are tons of online sites offering analysis of companies – both technical and fundamental. And there are many affordable investing courses to develop your analytical skills.
After spending years looking at investment case studies, I have come to the conclusion that my edge is my investment horizon. I hold onto stocks for years and my annual stock portfolio turnover is single-digit.
Most of the case studies – even those based on fundamental analysis – cover much shorter time horizon. I can understand that if you are a technical investor, you would have a short investment horizon. But I was surprised that many fundamental investors focus on short term fundamental signals eg earnings surprises, changes in interest rates, announcement of new products.
Moral of story? You better figure out your investing edge if you want to be a successful retail investor. You cannot rely on luck all the time.