Last Updated Jun 12, 2011 12:52 PM EDT
Active Strategy #1: Market Timer
In no way am I a "buy and hold" investor. I actually time the market and have profited from from it. No, I don't use technical or fundamental analysis, I use something far more scientific -- behavioral economics.
My system for market timing is simple and effective -- it's called rebalancing. And I use this system whenever the target allocations I have set for my portfolio move up or down by more than 5 percentage points. For example, my equities target is 45 percent, so I will rebalance if the percentage becomes greater than 50 percent or less than 40 percent.
This is a contrarian strategy that requires me to buy equities in a down market such as 2008 and early 2009, and sell in up markets such as we've had in the last couple of years. Behavioral finance tells me consumers will be doing just the opposite.
note: image from stock-technical-analysis.net
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