The 4 investment strategies are as follows:
1) Value stock investing:
Value stocks are the lowest risk. Fortunately, Tykr finds value stocks for us automatically as On Sale stocks are typically Value Stocks. With Tykr, you can find Value stocks that match and beat market returns. Value stock investing is the easiest way to build wealth.
2) Growth stock investing:
Growth stocks are those stocks that continue to rise regardless of the Summary (On Sale, Watch, or Overpriced). In other words, even if the stock is Overpriced, it can still rise. This is because growth stocks usually have high scores on the Meaning, Moat, and Management. Sure, the financials need improvement but in some cases that does not matter. The Meaning, Moat, and Management are strong enough to drive the share price up. Keep in mind, there are a lot fewer growth stocks in the market than value stocks but if you find the right growth stock, you can make great returns. Also keep in mind, growth stock investing is riskier than value stock investing. Some stocks may be perceived as growth stocks but they can actually be speculative stocks that are driven by emotions. We’ll touch on speculative stock investing below.
3) Speculative stock investing:
Speculative stocks are the highest-risk stocks and this is where most inexperienced investors lose money. Marijuana stocks, penny stocks, and IPOs are typically speculative stocks. These stocks are driven by emotions. A lot of people can fall into a FOMO (fear of missing out) trap of trying to get rich quickly but end up losing large sums of money. A great way to determine if a stock is speculative is to look within Tykr. A speculative stock typically has a low score on all 4 M’s. Overpriced stocks are typically speculative stocks.
4) Dividend stock investing:
Dividend stocks are stocks that pay a quarterly or yearly dividend just for holding the stock. You can build wealth through dividend investing but it can take a long time. By using Tykr, value stock investing will build wealth significantly faster.
Keep in mind, stocks can transition between Value, Growth, Speculative, and Dividend. It’s important to run a 4M checklist to really understand the difference, especially between Growth and Speculative.
In summary:
- Value stock investing is by far the best investment strategy. It is the easiest path to wealth creation because of consistency. When you achieve consistently high returns year over year in the market, that’s where real wealth is created.
- Growth stock investing can generate high returns but it comes with higher risk.
- Speculative stock investing I avoid at all costs. This is a surefire way to lose money. The good news is, Tykr typically classifies speculative stocks as Overpriced. I’ll never have to worry about buying a speculative stock.
- Dividend stock investing can take a long time to build wealth. Because of Tykr, the compounded returns with value stock investing outweigh dividend stock investing by a long shot.