Question No. 12

"Are There Any Simple Strategies That Will Produce Superior Returns for my Pension Pot?"

Our Response

You don't have to delve too deep into our website to find the answer to this question.  There are two sections of our website dedicated to the topic of strategies.

One long term (and recommended).  And one short term.

Within those two sections are quite a few strategies you can put into practice.  Each one, especially the Short Term Strategies, are designed for a specific purpose.

Without further ado, there is one strategy above all others that is simply the best.

And what is it?

Drum roll please .....

Quite simply, it is this:  do the research that will uncover "value" stocks and use another technique that will let you know when to buy them and when to sell them.

Simply the best strategy of them all.

"Simply the Best Strategy of Them All"

The section on Fundamental Analysis will show you baby-step by baby-step, how to find value shares.  But ...

You can't just pile in.  You have to be patient and wait for a buying opportunity.

...you'll be researching several companies, in several sectors, and it's just possible that at least one of them will be a buy.

Why would only a few of them be a buy and not all of them?

Or maybe none of them would be a buy.  In which case you wouldn't buy anything.  You would wait, and wait, and wait some more, until a buying opportunity came along.  (And this, requires patience).

And how would you know when to buy?

Because you will be using Technical Analysis.

Technical Analysis will show you when to buy (and when to sell) your chosen shares.

This is the main strategy that is recommended on our website.  You research a company but you don't necessarily buy it until the time is right.  Then you buy and you hold that company until you get a signal to sell.

That signal could be in a few weeks (doubtful), or a few months (still not very likely) or even a few years (more likely).

Most amateurs buy when it's almost ready to sell, and sell when it's almost ready to buy. 

Now here's the good bit.  Providing all the fundamentals remain in tact, that same company's shares are a buy again when your Technical Analysis gives you the signal.

Most investors don't do this.  Presumably because they haven't got the patience or the resolve to stay with their choice of share.

But history has proved this to be the best strategy, bar none.  It will produce superior returns.

Of course, there is more than just this one strategy, but if you're looking for superior returns, then nothing beats that strategy described above.

"Some Other Strategies to Give You
Superior Returns"

Here, very briefly is another strategy that will give you superior returns for your Pension Fund.

It's a Short Term Strategy and potentially a very risky strategy.  Normally, you would not use this strategy, but when it works, it works like gangbusters.

And because it's potentially risky, you must do your due diligence.

The strategy is simple.

You buy a company shortly before their results or trading statements are announced.

Why is there such a high risk?

Because when a company announces its results they may be what the market expected, better than the market expected, or worse than the market expected.

But the market may mark the shares up (or down) irrespective of the results, be they good, bad or indifferent.

So why use this strategy at all if it's nothing more than a lottery?

That's a fair question.

The answer is that with a little digging and delving you can make a good educated guess at how the market will react to the company's results.

We have done very well with this technique.  We haven't got it right every time, but we have been right a lot more times than we have been wrong.

But ... and we stress this, the strategy is high risk.  We only ever use this with a tiny proportion of our fund (around 10%) and even then we only use profits made on previous trades.  We would not like to speculate with any hard-earned cash using this strategy.

"Here's One More Strategy That Can Give You Superior Returns"

Here's another simple strategy.  Again, not really a long term strategy although it could be. The strategy is to subscribe selectively to company IPOs.

An IPO is an Initial Public Offering.  Such as the Royal Mail Group or the UK Government's sale of its stake in Lloyds Banking Group.

Not all IPOs when they make their debut trade at a premium.  And as they have no market history, it's impossible to perform any worthwhile Fundamental Analysis on them

The only analysis you can do on IPOs is "reading between the lines" of the company prospectus.

But, some very good companies come to the market and if you choose well you could make good profits.  And who knows?  You could be left with a solid long term winner.

We don't 'go' for every IPO that comes to market.  We try to be selective.  You could, of course, subscribe to every IPO that is made available on the basis that most will make a premium on their debut. 

Sadly, not all IPOs are available to the public.  A lot are only offered to institutions.

Conclusion

On our website we reveal several strategies.  Some long term and some short term.

More to the point, we reveal how we research them.

But as repeated throughout our website, long term strategies are the way to go and Short Term Strategies are really just a bit of fun.

Some are quite fascinating.

But if it's superior returns that you want - stick with the best strategy.  And that is the number one strategy mentioned at the beginning of this article.

Footnote

As a newbie, you may want to read the other "Frequently Asked Questions" on this website.  Doing so, will give you a good introduction to running your own DIY Pension.

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