Different investors follow different approaches when they deal with portfolio investments. Four basic approaches of investment portfolio management are illustrated below, but there could be numerous variations.
- The Holy-Cow Approach: These investors typically buy but never sell. He treats his scrips like holy cows, which are never to be sold for slaughter. If you can consistently find and then confine yourself to buying only prized bulls, this holy cow approaches may pay well in the long run.
- The Pig-Farmer Approach: The pig-farmer on the other hand, knows that pigs are meant for slaughter. Similarly, an investor adopting this approach buys and sells shares as fast as pigs are growth and slaughtered. Pigs become pork and equity become hard cash.
- The Rice-Miller Approach: The rice miller buys paddy feverishly in the market during the season, then mills, hoards and sells the rice slowly over an extended period depending on price movements. His success lies in his shills in buying and selling, and his financial capacity to hold stocks. Similarly, an investor following this approach grabs the share at the right price, takes a position, holds on to it, and liquidates slowly.
- The Woolen-Trader Approach: The woolen-trader buys woolen ever a period of time but sells them quickly during the season. His success also lies in his skill in buying and selling, and his ability to hold stocks. An investor following this strategy over a period of time but sells quickly, and quits.