When it comes to trading, some strategies are about time in market, and not market timing. As legendary investor and entrepreneur Warren Buffett once said: “Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
The charts below demonstrate how Buffett’s observation materializes in the market, using the S&P 500 index as an example:
With the U.S. market reaching all-time highs at the end of 2016, let’s take a look at someone who was able to benefit from that positive trend.
Please meet Evgeniy Potapov, AKA @ZhenyaPotapov, a Cadet eToro Popular Investor from Russia, who started to build his portfolio at the end of 2013.
When you read his Bio you realise that his “Buy and Hold” strategy, is the key to his success:
“Before starting to copy me, please note: Don’t start doing so if you are not ready to wait for some months, or even years! You could end up buying some positions at a much higher price than I did earlier. There will be returns eventually, but it could take a bit longer than you think. If you don’t have patience or are seeking quick, big profits you might get disappointed. I’m not a professional trader. I’m working with my own money here, and I don’t want to lose it. So here’s my strategy: Building a diversified investment portfolio, which will grow with no sharp differences, and will be as green as possible. Since red in my statistics unnerves me, I’m all about Buy and Hold. I invest in shares of famous companies, who pay dividends, and in exchange-traded funds. I do not invest in currencies.”
A full asset allocation will give his copiers a great CopyTrading experience. His portfolio combines between several ETFs, such as the RSX, which gives him an exposure to the Russian economy, theEWZ, which gives him the Brazilian index, and the TLT, which gives his portfolio some bond exposure in the U.S. economy:
At the same time, more than 50% of his capital is invested in stocks:
His full Asset allocation is highly balanced:
He keeps his risk score low, in accordance with his strategy:
And while having some losing months, his long-term strategy does pay off from a yearly perspective:
Lastly, going back to the S&P 500 example, we can see that comparing his strategy to the index reveals the sense behind his approach: