It’s the weekend, and it is time to do a lookback analysis, log trades, refine and learn the trading strategy to get that finesse level. It is all about the finesse. First and foremost, we survived the first week of 2021, even though we had a crazy midweek riot.
I will try to keep this short and simple because it is all about the content. Core strategies that I will look to learn in 2021 and incorporate in my portfolio:
Long-short funds
Long-short funds are the primary and traditional type of hedge funds. Go long on securities that outperform the market and short securities that underperform the market.
Event-driven funds
Take advantage of various market events that can influence the price of securities, such as political developments, natural disasters, and so on. For example, the pandemic drove e-commerce companies to the moon, and political election shed some light on clean energy companies.
Macro funds
Profit on price fluctuations caused by macroeconomic events. This strategy requires invests in several different financial markets, such as stocks, bonds, commodities, and crypto, to reduce market risk through portfolio diversification.
Emerging-market funds
Emerging-market funds invest in securities of developing countries that have a relatively low per capita income. Since emerging market economies tend to be quite volatile, those funds are usually somewhat risky, but their returns can be high. In 2020, Bloomberg identified Thailand, Russia, and South Korea to be the top emerging countries.
The next step will be selecting a couple of stocks from each bucket and balance out the portfolio allocation. While each category represents different risks, as a whole, If I incorporate this strategy effectively, my portfolio should be optimized to tackle the market from a broader angle. It is easy to fall into the FAANG trap in the bullish market; however, I have to take another step to build exposure in companies like Sunpower, Immersion, Skillz, and Nanodimension. Not to mention, genomic companies are on the rise too, thanks to Miss Cathie, the new celebrity.
As usual, I am not a financial advisor, and this is not advisable for you to start dwelling on stock trading. The thought process above is solely to validate my understanding before purchasing any equity. I am still learning the process of evaluating and identifying opportunities in the stock market. By doing this, I am creating a structure for my brain to follow and not be an impulsive buyer or act emotionally when the market is against me. It is a journey I thought of worth sharing with any interested audience.