Trends, Hedging, and Company Management in Investing (Stock Investment Strategy Creation)

If you have been following along for a while you know that I'm trying to create a descent stock investing strategy. I'm not a professional investor but just a guy who likes to dabble in the market. Like many of you I also have goals and no one gave me anything in life (the opposite actually). The one thing I like to do is learn and theory play. So I'm trying to do that here.

In the recent past I was posting the specifics of my strategy but think maybe it's best to sort of keep it to myself a little because it seems to be working. That doesn't mean it will work in the future and maybe tomorrow it's all gone but the point is right now its working. Do not take my advice for anything and this is why rich people pay brokers with knowledge. While I know a few rich people and hung out with some I'm thoroughly culturally middle blue collar class but still classy. Yes, I work on my own rustic historical cabin and won't work on my car yet because its relatively new but hoping to find an old pick up to fix up (fishing stuff, firewood and terrible winters give me use of it).  That should sum up my upbringing. Give me Levis and a flannel!

I had an old account and sold the few stocks I had in it about a year ago to start a fresh portfolio to see if I could create gain that can beat out the experts. A clearer starting point. Total return right now is something like 98.57%. Hey it's something I might be good at! From what I can tell that is higher than most of the experts in the field. It's kind of a good sign.

Three things that I think about before buying a stock are trends, hedging, and company soundness.

1. Trends help me think of what type of companies I believe will grow in the future from an industry perspective.

2. Hedging helps think of how the whole portfolio will act under different market conditions and pressures. I have noticed some going up and some going down. They do sometimes flip flop.

3. The way a company is managed is important so I look through the statements and leadership. I typically look for American companies if possible and seems appropriate. My American brothers and sisters need high paying jobs! (Many investors will sell us out for a few pennies on the share.)

Overviewing my portfolio I can say that it is more stable now than it was when it started a year ago with most socks going up and only a few going down versus a number going down and a couple of star performers bouncing off the ceiling. Further, I have sort of diversified industries that include physical assets (i.e. home construction), manufacturing, space flight, energy, batteries, precious metals,  AI and Crypto (more of the AI crypto mining process). There are others but you can sort of get the point.

Further, I also like to read different studies and reports because they provide insight. For example, when do you hedge and when do you not hedge? What strategies seem most effective? so on and so forth. I included an article I thought was informative to understand certain parameters.

The publication discusses hedging strategies like cryptocurrencies, gold or oil. The authors indicate there are minimal short-term advantages to hedging using gold, oil, and crypto (Echhaust, Just & Kliber, 2024). You can read To hedge or not to hedge? Cryptocurrencies, gold and oil against stock market risk.

Echhaust, K., Just, M. & Kliber, A. (2024) To hedge or not to hedge? Cryptocurrencies, gold and oil against stock market risk. International Review of Financial Analysis, 94. https://www.sciencedirect.com/science/article/abs/pii/S1057521924002242