Building Your Portfolio - The Aggressive Investor

Here are some characteristics of the aggressive investor:

Committed to learning about stocks and the stock market and spends lots of time thinking about stocks and investing.
Takes chances and "bets" on speculative stocks
Likes the "action" of the market
Trades stocks in the short term
Not afraid to lose money

If you fit most of these characteristics, you qualify as an aggressive investor. If you're more cautious and less involved in stocks and the market, read the Cautious Investor.

I encourage you to learn about the Complete Trading Model (CTM). You'll find that CTM is very useful in confirming bottoms an tops and will help you make profitable trades.

What Should You Buy?

In addition to any investment owned by the cautious investor, the aggressive investor can own the following:

Speculative stocks - usually small to medium market cap, fast-growing companies whose price is volatile.
Cyclical stocks - price pattern has prolonged upside followed by prolonged downside. Good stocks to trade.
Blue chip stocks - well-managed companies with steady growth in revenues and earnings and stock price has a prolonged upside. Good stocks to trade for a predetermined profit or buy-and-hold.
Options - buy a call to bet on an upside price move and a put to bet on a downside price move.

The aggressive investor can open a margin account with a brokerage firm and buy on margin and can sell short to bet on a downside price move.

When to Buy

The aggressive investor needs to be ever mindful not to buy on the downside and not to pay too much for a stock. Before you invest, read Buy on the Upside and Never Buy on the Downside, Buying at the Peak, Bubbles and Making Buy Decisions.

When to Sell

Sell when you have a predetermined profit, prices start to the downside or the company gets into trouble. Don't sell a good company just because its price is down. Hold the stock and wait for the price to recover.

If you buy a stock and realize that you made a bad decision (for whatever reason), sell it immediately. Take a small loss or gain and move on. For more information about selling stocks read Making Sell Decisions.

Conclusions and Recommendations

To make money consistently always buy a quality stock at the right price (don't pay too much). Don't buy on the downside and sell when you have a substantial profit but don't get greedy.

For more investing guidelines read Key Investing Principles and Build Your Own Portfolio.