Archive for May, 2008
What does Warren Buffett think you should do?
Are you looking for the best way to build wealth? Why not seek the advice of the world’s best investor?
Warren Buffett says that the best way to maximise your wealth is to focus on your career and to invest in index funds. You may find that surprising advice from a great investor, yet it does make a lot of sense.
If you’re devoting your free time towards trying to out-smart the market at the expense of building your career skills, you may want to re-think your strategy.
Devoting your free time to building your career skills has a much better pay off than devoting it towards trying to out-smart the market. This is the philosophy of Warren Buffett and we think its pretty hard to disagree.
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Is there value in trying to time your entry & exit from the market?
This article aims to address the pros and cons of the investment strategy known as ‘market timing’.
Market timing is the strategy of making buy or sell decisions of financial assets by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions and the strategy is based on the outlook for the market as a whole, rather than for a particular financial asset.
The aim of the market timing strategy is essentially to switch between growth assets and defensive assets in order to generate a better risk adjusted return than that from holding a strategic combination of both asset types. When the future looks bleak, the market timer reduces their exposure to growth assets and increases their exposure to defensive assets. When the future begins to look rosier, they will begin to increase their exposure to growth assets at the expense of defensive assets.
