If you had been following the 2015 MLB games, you may have noticed something different in the play of this year’s championship team, the Kansas City Royals.
Instead of chasing the home runs and the grand slams like most of the other teams, the Royals decided to own the small ball strategy. They took the opportunity to make every little play count because they believe that in the end, the inches that they fought for will add up to something big and it did.
As an investor, I can see value in playing small ball in the stock market. In fact, the more I thought about this strategy, the more I begin to resonate with this method. Starting today, I will adopt this approach in my investment strategy and see where it will lead me. Here is how I plan to do it:
My Old Strategy
Previous to this change, my original investment strategy was to only buy the stocks that I can see myself holding forever.
Although this is a very sound strategy, I have found this method to be too slow for my timeline. If I really want to meet my deadline to become a millionaire by 2020, I will need a much faster approach.
Building a passive dividend portfolio and profiting through compound is a strategy that I will implement after my goals have been reached. However, in the meantime, I think I will start to transition into a more active participation in the stock market.
Selling Isn’t the Enemy
Many people may have probably heard that too much selling is a bad idea especially when the commission fees are high. Initially, this was my thought as well. After all, Warren Buffet is an advocate to long term holding so why shouldn’t we model one of (if not) the most famous investor in the world.
Personally, I don’t think there is anything wrong in that school of thought. However, I do think that congruence is important when it comes to goal alignment.
It is no surprise that my million endeavour is one that is very aggressive. As a result, I will need to make more aggressive moves especially in the stock market.
Setting Realistic Goals
My new strategy would include selling when my goals for each individual stock are met.
Before making any purchases from now on, I will first determine how much return to expect and buy it at a specific discounted price. Once the stock price hits my expected return rate, I will sell.
Unfortunately, this is all speculation and theoretical for now but if this strategy flops, I will take it as a learning experience and move on.
Crafting the Team
Having a strong team dynamic is also important in any professional sport competition.
The first step to implementing this new strategy would be to build a list of potential stocks that I can see myself investing in.
I am thinking of building a list of 20 to 30 stocks to keep daily track of on my smartphone application. When it comes to purchasing stocks, only those on the list will be considered. Of course, as time progresses some of these stocks may be replaced by others.
As for which companies will be included in my list that is yet to be determined. I will post them when I have any updates.
I would love to hear from you. What do you think about this new strategy?
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