Investment Strategies with Aileron

By: Bill and Cindi Porter, AILERON INVESTMENT ADVISORS

Q: Should I pick stocks myself or seek professional experience?

A: It depends on the person. Investing in the stock market is much different today than just a few years ago. The Wall Street Journal reports that “Roughly 85% of all trading is on autopilot — controlled by machines, models, or passive investing formulas, creating an unprecedented trading herd that moves in unison and is blazingly fast.”1

This recent development means that even if someone analyzes a stock and the research shows it to be a good prospect for future growth, if the herd moves in the opposite direction the investor may be trampled by the stampede. High-frequency traders, also known as quantitative traders, identify profitable trading opportunities based on mathematically driven computer systems and research. It has become increasingly more evident that quantitative traders can push the market in the direction they want it to go, causing much of the extreme volatility we see today.2

Some investors enjoy the challenge and exercise of doing their own research. Like any hobby, investment research can be fulfilling for some people. However, the research must continue after one acquires a stock or bond. It is important to know — not only when to buy — but also when to sell.

For example, Exxon was a stellar stock for decades. On December 1, 2016, a share of Exxon was at $90.26. Four years later, on Dec 1, 2020, it was down to $38.50.1 Exxon, which had been a member of Dow Jones Industrial Index since 1928, was removed on August 29, 2020. At one point, buying Exxon was a good idea. At another point, selling Exxon was also a good idea. Always keeping your research current is imperative for an individual investor. Are you prepared for that challenge? If so, turn on your computer. If not, you may prefer professional assistance.

Sources:
1 https://finance.yahoo.com/ January 9, 2021. 2 Howard Capital Management – Volatile Market Guide

This is for education only. Before using this information in any way discuss it with a financial professional. There are many risks associated with stock trading. You may lose some or all of your financial investment. Securities offered through Dempsey Lord Smith, LLC Member FINRA/SIPC. Securities offered through Integrated Financial Planning Member FINRA/SIPC. Advisory services offered through Dempsey Lord Smith, LLC. All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.

Send your investment questions to: submissions@SuwaneeMagazine.com.

All the information in this letter is published in good faith and for general information purposes only. We do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information is strictly at your own risk.

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