Active Stock-Picking
Active Stock-picking refers to the investment strategy where an investor or fund manager selects individual Stocks to buy and sell with the goal of outperforming a Benchmark Index. This approach involves extensive research and analysis to identify Stocks that are expected to perform better than the market average.
Examples of active Stock-picking include:
- Value Investing: An investor identifies undervalued Stocks, such as a company with strong fundamentals but a low market price, and invests in them hoping the market will eventually recognize their true value.
- Growth Investing: An investor targets companies with high growth potential, such as a tech startup expected to increase its Revenue significantly over the next few years.
- Sector Rotation: An investor shifts investments between different sectors of the economy based on market trends, such as moving from technology Stocks to energy Stocks when energy prices are expected to rise.
Cases of active Stock-picking can include:
- Warren Buffett: Often cited for his active Stock-picking approach, he invests in companies he believes are fundamentally strong and undervalued, such as Coca-Cola and American Express.
- Fidelity Contrafund: A mutual fund known for its active Stock-picking strategy, focusing on companies that have the potential for significant growth.