Question

-Do you think it is better to buy and hold or to time the markets?
-What type of stock are you interested in? Any specific sectors or companies interest you?
-What would be your portfolio allocation percentages? (Now you can use bonds, stock, currency, precious metals, commodities, real estate, etc)
-Why do you choose this as your allocation?

Answer 1

1. It is always better to buy and hold the stocks. It is really difficult to time the markets.

Let say timing the market means buying the dip and buy and hold means you are consistently buying and averaging out the price.

Now, buying the dip will only works when one know that a drastic decline is on the way and one can time it perfectly. We know that big dips haven’t happened very frequently in the US market (i.e. 1930s, 1970s, 2000s), this strategy will rarely beats averaging cost.

2. I usually invest for me and my clients in the businesses which are asset-like such as technology companies. These companies help create wealth in short time as these companies bring disruption in the market and can pull clients / customers at very rapid speed. And with minimum assets and resources, the profit margin can increase significantly. My favorite stock would be Amazon, Tesla, Facebook and Alibaba

3. Portfolio of me and my clients are decided based on the age. One should consider the risk taking ability and capacity before deciding on the portfolio. Thumb rule that can be used is % of allocation to equity = (90 - age), 5%-10% to gold assets, remaining to the debt. Also, always remember to allocate 1 year of your expense as emergency fund in the bank as liquid cash. Real-estate assets are not liquid, hence, I avoid investing in real-estate assets.

4. The concept of your allocation depends on the risk management. During initial years of your career you can take risk and hence, create wealth so one can invest in risky assets such as equity. Due to availability of time, the risky assets becomes favorable. With increase in age, the risk taking ability decreases and hence, allocation towards debt asset and government securities should increase.

Feel free to ask me more question on above through comments