Trading, Investing and Portfolio Insurance

Recently, many of my friends and family have been discussing how to invest and protect their hard-earned money to save for their retirement, children’s education, weddings and a host of other activities and events that require large sums of money. Most are concerned about market swings and corrections, and many have discussed whether they should turn their money over to a full-time investment advisor. I do not know what’s best for any one individual, but I have always felt strongly that I work hard for my money, and I do not believe that anybody cares more about my money than me. For this reason, I have been a student of the equities markets over the past two decades.

My father nurtured my interest in investing in 1987, and my father-in-law introduced me to trading in 1997. Over the years I have made money and lost money using a combination of stocks, mutual funds, and options. As my children get older and college is now in the single digit years away, my interest has turned to better managing and controlling investment risk and maximizing investment returns. Over the past twenty years, I have morphed into a trader/investor, or TI for short.

Both investing and trading require strict discipline, using a longer timeframe and shorter timeframe respectively. As a trader/investor I use three primary methods to mitigate portfolio risk and maximize returns:

  • dollar cost averaging (monthly, long-term investing)
  • value averaging (monthly, long term investing)
  • trading (as dictated by the “helium and gravity method”, explained in a future post)
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