Offensive and Defensive Investing

[Matt]

If you are self made, going from little wealth, and perhaps often stepping into debt on the way it is hard think defensively about your wealth. I myself went through the cycle of aggressively seeking to earn above average returns. The classic route for this is single stocks and derivative trades such as Options, that allow leverage.

The classic argument from the whippersnappers is that it is 'all well and good to invest in a boring manner, but that won't make you rich'. I argue that investing won't make you rich anyway - you need to have a solid sum of money together in order for it to be of any self sufficient substance, and you won't get that from trading.

I'd like to hear thoughts on this, on how people are picking stocks and options trades in order to create 'market beating performance'. What average annual return are you seeking from an investment, and what strategy do you have to achieve that rate of return?

 

[RRD]

I am a risk taker/offensive investor. I’ve switched a four jobs in my 12 year career and therefore have I have two 401ks and one rollover into an IRA.The 401ks have money iinvested in mutual funds, the other is a rollover to Merrill Edge which gives me great flexibility in picking and choosing stocks. I am very aggressive in the latter. Buy and hold works for me but not for a long term. If I get 40% on a stock, I sell it immediately though I have repented that as well. For example, I was/am very bullish on airline stocks (Delta/American/United/SW) - the knowledge of airline industry due to this MS hobby of ours has come in very handy. Bought DAL for $9 a couple of years ago which is at $40 today though I sold it at $22. For the last year or so, I have had about 25% cash sitting in my ME portfolio because of the impending market crash/correction that has not happened so far. A mini-correction did happen in this sector last week when airline stocks dropped 25-30% due to Ebola fears and the cash in hand came in handy. I scooped up these beaten down stocks and have already gained 30% in the last week. So, all in all, I keep a close eye on market performance and pick mostly aggressive growth stocks. GILD was one such stock I bought at $50. Now is the time for buying oil stocks , I feel. Buy small amounts in succession to catch the bottom, is my mantra.