2) Follow those favoured (by fate, birth, talent, experience, connections or whatever). This can also be described as the Midas Touch Strategy. At one time, our market will have a few favoured personalities who possess or are believed to possess the golden touch. It is not appropriate for me to name examples but the market and almost everyone knows them. These personalities will be on magazine covers, sought after for speeches and be invited everywhere. The mere inclusion of their name on the board of directors and their taking a significant shareholding stake is sure to create interest and an upping of the price-earnings value. One problem with this strategy is having to differentiate the perennial from the seasonal favourite personalities. The seasonal ones can lead to your improvishment even though they are not likely to accompany you to the poor house.
3) Forever contrarian. According to this strategy, you buy when the market is selling and sell when the market is buying. This strategy, of course, makes sense since a selling market means low purchases prices and a buying market means high sale prices.
4) Just wait for the action strategy. A player explains the strategy this way. You watch for IPO shares that do not rise upon listing. These fellows are not stupid, they are bound to do some action one. Action could mean syndicate play, accounts manipulation, genuine good performance, shares buy-back, rumours of timber concessions or lucrative contracts. These are examples of IPOs which behaved according to this theory.
5) Caution over using borrowed funds for share purchases. Leverage is a double edged sword. It can invrease profits but carries financial risk. Borrowing percentages suitable for self occupied houses are not suitable for share financing.
There is no such thing as sure thing. Share prices can go up as well as down. However promising the outlook for a counter, limit the purchase to prudential levels.
6) Diversification make sense. A balanced investment portfolio should include not only shares but landed property, bonds, fixed deposits and other liquid assets. Holding of shares should also be diversified with blue chips, high dividend yields, speculatives and so on. An older investor should hold more blue chips while young high income earners can be more adventurous.
7) Liquidity. Some assest should be in the form of cash or near cash. Note that some shares are more liquid than others, depending on how easy it is to dispose them. Seasoned businessmen keep some liquid assets even thought they take loans. Having some money to take advantage of investment opportunities and generally reduce stress.
8) Avoid getting cheated. There will always be scammers and schemers out there trying to cheat whoever they can. Older investors, in particular retirees, cannot afford to be cheated even once. When a party has excited you about some sure thing, do not rush in, do not fear losing a golden opportunity. Do seek out someone reliable and knowledgeable for advice. The investment proposal always has his own motive.