Last month I argued for partly or entirely managing your investment portfolio (as I have done for half a century), rather than relying on professional managers.

You don’t have to make repeated and difficult decisions such as what to buy or sell and when to do so. You could simply use a formula plan, as I described two years ago, with fixed proportions of different assets requiring no more than periodic rebalancing. That’s an easy, low-risk way to secure and grow your personal wealth.

But if you want a more hands-on, actively managed approach – which could bring you higher long-term returns, gives you more of a feeling of controlling your destiny, and is certainly more interesting – how should you go about it?

You must have an investment plan, one based on a particular style that appeals to you, such as value, growth, contrarian or momentum investing.

You need to stick to the discipline of a system – but only if it works for you. If it doesn’t, scrap it and switch to a different one.

Benjamin Graham, the founder of securities analysis, changed his stock-picking criteria several times. He warned that investment theories often cease to work, and that even good theories do not work in all market conditions.

David Fuller's view

Here is On Target.

Having been in the investment business for over fifty years, and provided independent research services for the last forty-five years, I have had the privilege of meeting many successful investors.  I have also met a number of unsuccessful investors who either stop managing funds for their clients or themselves, or persevere and haul themselves up the learning curve. 

Most subscribers currently have or have had an institutional background, and eventually focus mainly on managing their own family assets.  Others have had successful careers in various fields, and eventually retire or semi-retire and draw on their accumulated wisdom in managing their own assets.  Interestingly, no two are exactly alike in terms of their investment or trading strategies. 

Perhaps this is not too surprising since they are all individuals, who will consider and then adopt or adapt investment approaches which suit their temperaments.  They will also alter their methodologies over time because circumstances change.  In other words, they are not weighed down by other people’s rules which may interfere with creative analytical thinking. 

For this reason I found the first paragraph above mentioning Benjamin Graham and how he changed his stock-picking criteria several times, the most enlightening portion of Martin Spring’s initial comments.  Similarly, Martin’s brief comments on charts above are incredibly useful for anyone approaching this subject for the first time. 

On first consideration, some people have turned away from price charts because they found the rule based or line drawing obsessed approach simplistic.  I agree, but charts do show us the money flows and often the changing psychology of the crowd towards any instrument under consideration.