Investing
Active
Passive
Approaches that involves monitoring the prices of positions to seek buying and selling opportunities
Investors buy positions as soon as they have the funds to do so or when they decide to act.
Selected positions based on research whose goal is to outperform some sort of Benchmark.
Investors really don't do big research or analysis of individual companies, but rather spread money across a large number of stocks.
The amounted investor outperforms their benchmark is referred to as Alpha Return.
Benchmark can be a index or mix of indices that some gauge of how the overall stock market has performed
Alpha return- active return on an investment
Believes in the Efficient Market Hypothesis (EMH), at any given time a stock's price will reflect all available information and trade at its fair value.
Diversification & long term exposure
can have fees below 0.5%
Believes a stock's price can often deviate from what its actually worth
Dave Ramsey personally invest in good growth stock mutual funds, spreading across four types
Growth and income
Growth aggressive
Growth Fund
International
Overseas companies
Mid Cap, companies that are growing
Small cap, small start up companies
Larger cap, stable market businesses
85% of his mutual funds are based on rate of return
Buy funds that outperform the market
If the mutual fund is below the S&P 500, DON'T BUY THAT FUND!