Investing is simply committing money in order to earn a financial return, taking into consideration such factors as individual goals, risk tolerance and horizon. While some investors "shoot from the hip", so to speak, those with a plan will often employ one or some combination of the following investing methods:
Short-term Investing - An investing strategy in which an investor takes advantage of short-term market volatility (up or down) for maximum profit potential. This approach is advocated by and is the basis for The RightLine Report.
Formula Investing - An investing strategy which eliminates emotional decisions by following a specific set of rules. Some examples are:
Aggressive - An investing strategy characterized by a willingness to accept above-average risk in pursuit of above-average returns. Usually favors stocks over bonds, especially stocks of rapidly growing companies, and sometimes employs buying on margin, options trading, and arbitrage.
Bottom-Up - An investing strategy in which a company's performance, history, management, and potential are more important than general industry, economic or market trends.
Buy And Hold - An investing strategy in which stocks are bought and then held for a long period, regardless of the market's fluctuations.
Conservative - Cautious; having a risk-averse investment strategy which has preservation of capital (desire to avoid risk of loss) as a high priority.
Dollar Cost Averaging - An investing strategy designed to reduce volatility in which securities, typically mutual funds, are purchased in fixed dollar amounts at regular intervals, regardless of what direction the market is moving.
Growth Strategy - A strategy based on investing in companies and sectors which are growing faster than their peers. The benefits are usually in the form of capital gains rather than dividends.
Indexing - A passive investing strategy in which a portfolio is designed to mirror the performance of a stock index, such as the S&P 500.
Top-Down - An investing strategy which first finds the best sectors or industries to invest in, and then searches for the best companies within those sectors or industries.
Value Investing - An investing style which favors good stocks at great prices over great stocks at good prices. Utilizes such valuation measures as price to book ratio, price/earnings ratio and yield.
Green Investing - Environmentally correct investing.
Coattail Investing - An investing strategy in which an investor tries to duplicate the performance of a successful (and usually well-known) investor by copying their trades as soon as they are made public. This is a risky strategy, since there is a time delay between when the successful investor's trades occur and when they are made public, and because the strategy disregards overall portfolio considerations, risk tolerance, and other unique circumstances.
Ethical or Socially Conscious Investing - Investing in companies that operate ethically, provide social benefits, and are sensitive to the environment.