Module 4: Investment Strategies

Module Introduction

Investment strategies represent the practical application of the analytical skills developed in previous modules. While Modules 2 and 3 taught you how to analyze companies and time market movements, Module 4 focuses on systematic approaches to building wealth through stock market investing. Each investment strategy has its own philosophy, methodology, and risk-return characteristics, making it crucial to understand which approaches align with your goals, risk tolerance, and investment timeline.

The foundation of successful investing lies not just in picking good stocks, but in following a consistent, disciplined approach that can be applied across different market conditions. Great investors like Warren Buffett, Peter Lynch, and Benjamin Graham didn’t succeed by constantly changing their methods, but by developing and refining specific investment philosophies that they applied consistently over decades.

This module explores five major investment strategies that have proven successful over time. Value investing focuses on buying stocks trading below their intrinsic value, often during periods of market pessimism or temporary company difficulties. Growth investing targets companies with above-average growth prospects, accepting higher valuations in exchange for superior business expansion. Income investing prioritizes dividend-paying stocks that provide regular cash flow, appealing to investors seeking current income and capital preservation.

Momentum and trend-following strategies attempt to profit from the continuation of existing price trends, based on the observation that stocks in motion tend to stay in motion. Finally, specialized investment approaches include sector rotation, international investing, and alternative strategies that can enhance portfolio returns or provide diversification benefits.

Each strategy requires different analytical skills, temperament, and market conditions to be most effective. Understanding these differences helps you select approaches that match your personality, goals, and circumstances. Many successful investors combine elements from multiple strategies, creating hybrid approaches that leverage the strengths of different methodologies.

The key to investment success is not finding the “perfect” strategy, but rather finding an approach you can understand, believe in, and execute consistently over time. This module will help you understand the principles, applications, and considerations for each major investment strategy, enabling you to make informed decisions about which approaches to incorporate into your investment process.