Investment Strategies
Every investor needs a repeatable way to choose assets and time decisions, and this category lays out the main ones.
The explainers cover value investing in the Graham and Dodd mold, growth and quality investing, momentum, dividend approaches, GARP, and contrarian thinking, then extend into systematic styles like trend following, mean reversion, and global macro.
For each, Investing With Purpose lays out the thesis, the regime where it tends to work, and the risk it carries when conditions turn.
The point is to pick and combine strategies on purpose rather than chasing whatever topped the charts last quarter.
The result is a clear view of how the major schools of investing fit together.
Value investing is the practice of buying securities for less than you think they are worth. The discipline traces back…
Growth investing is the strategy of buying companies whose revenue, earnings, and cash flow are expanding faster than…
Quality investing is the strategy of buying companies with high profitability, stable earnings, strong balance sheets,…
Momentum investing is the practice of buying securities that have outperformed recently and selling or avoiding those…
Dividend investing is the strategy of owning equities that pay meaningful, growing cash distributions, using those…
Contrarian investing is the practice of buying securities that are widely disliked and selling or avoiding those that…
GARP is an equity strategy that tries to buy growing companies without paying growth-stock prices. It sits between pure…
Trend following is a systematic approach that buys assets moving up and sells or shorts assets moving down. It relies…
Mean reversion is the idea that prices and spreads that move far from a historical average tend to pull back toward it.…
Global macro is a top-down style that places bets on shifts in economies, central bank policy, and geopolitics.…
Event-driven investing tries to profit from specific corporate actions such as mergers, spin-offs, bankruptcies, and…
Merger arbitrage is the practice of buying the shares of a company that has agreed to be acquired, and sometimes…
Long/short equity is a hedge-fund strategy that buys stocks the manager expects to outperform and shorts stocks…
Activist investing is a strategy where an investor buys a significant stake in a public company and then pressures…
Distressed investing is the strategy of buying debt securities of companies in or near bankruptcy at deep discounts to…
Pair trading is a market-neutral strategy that goes long one security and short another closely related one, betting…
A market-neutral strategy builds a portfolio whose long and short positions are sized so the net exposure to broad…
A carry trade borrows in a low-yielding currency and invests the proceeds in a higher-yielding currency, earning the…
Trend following is a systematic strategy that buys assets with rising prices and shorts assets with falling prices…
A global macro hedge fund takes directional and relative-value positions across currencies, interest rates, equity…
Merger arbitrage is a strategy that buys the stock of a target company after a takeover is announced and earns the…
Statistical arbitrage is a family of quantitative strategies that bet on the temporary mispricing of related securities…
Managed futures is an asset class in which professional managers trade global futures and forward contracts on behalf…
Long short equity is a hedge-fund strategy that buys stocks expected to outperform and shorts stocks expected to…
An event-driven hedge fund invests in securities whose prices are expected to move because of a specific corporate…
Distressed debt investing buys the loans or bonds of companies in or near bankruptcy at prices far below face value,…
Activist investing buys a meaningful minority stake in a public company and pushes management or the board to change…
Long-only factor investing builds equity portfolios that tilt toward characteristics, such as value, size, quality,…
The small-cap value strategy overweights small companies that trade cheaply on book value, earnings, or cash flow. It…
Quality factor investing buys companies with high profitability, stable earnings, and conservative balance sheets. The…
The low volatility anomaly is the empirical finding that stocks with lower historical volatility or lower beta have…
Momentum and trend following both bet that past price direction predicts future price direction, but they are not the…
A quantitative equity long-short strategy builds long and short stock positions from a rules-based model rather than…
A macro overlay strategy adds a derivatives-based layer of exposure on top of an existing portfolio to change its risk…