Are You an Investment Fox or Hedgehog?
Do you invest like a fox or hedgehog?
The book that I am reading now, Invest Like a Fox... Not Like a Hedgehog by Robert Calson, has an interesting idea that how you invest depends on whether you have a fixed mindset or if you have an adaptable methodology to investment.
One thing that struck me when reading the book is that there has been a popurri of methods and hypothesis which investors have clung to despite it being no longer true or effective. Like the January effect.
Once the methods become widely known, any advantages in being able to predict market movements will become useless as everyone in the know will know and act on it.
But what if it is an indicator of cyclical trend? Like the leading economic indicators are a good predictor of impending recession and a market crash. Even if people know about it, the recession will still come and stock markets will still fall.
For an indicator of an general up trend, the price earnings ratio of the entire market under study will be a good gauge. When it is near or below 10, it is a good time to think of buying in. If you have the gumption to do so. That's a big "if".
Then you keep buying in small amounts no matter what indicators are saying. As indicators could fail, so hedge your bets.
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