What investment style is the best to follow?

Julie Brownlee, Fsp Invest, 11 Feb. 2015

Tags: investing, investment style, value investing, trend investing, momentum investing, what investment style to follow, investment strategy,

The majority of investors either follow a value investing strategy or a trend (or momentum) investing strategy.

So which style of investing should you follow?

Read on to find out…

The difference between value investing and trend investing

If you opt for value investing, you’re on the lookout for ‘cheap’ investment to put your money into. You’re looking to get your hands on investments for less than they’re intrinsically worth.

In other words, you’re looking for shares with low valuations.

On the other hand, if you opt for trend investing, you want to invest in shares that have momentum on their side. In other words, they’re in an established upwards trend. The value of the share doesn’t really come into it.

What is the best investment style?

If you compare value investing and trend investing, which one is the best investment style to follow? The answer is both of them together.

But it’s rare to find an investor who combines both of these investment styles together.

Think about it this way. The more you pay for something, the lower your potential returns are in the future. That’s the premise behind the thinking of value investing.

Getting into a share on the cheap side is a good thing if the share rises. If it falls in value, you watch your shareholding fall in value.

By combining trend investing with value investing, you can reduce your chances of the share falling further in value.

Following the market trend helps you to avoid investing in the worst times on the market. And combining trend and value investing gives you a sturdy investment strategy to follow.

So there you have it, the best investment style to follow.

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