TDFA 2.2 | Investing - Types of Investing

Explore types and styles of investing including growth, value, and income investing, plus strategies for personal finance and portfolio growth.

Key Takeaways

Investing styles are fluid; avoid rigidly labeling yourself as just a trader or investor.
Growth investing offers high risk and reward, suitable for early-stage assets.
Value investing provides safer bets with established companies and lower risk.
Income investing focuses on steady returns, often via dividends from blue-chip stocks.
Diversification and risk management are essential for a balanced portfolio.

What the video covers

Introduction to types and styles of investing and their role in personal finance.
Discussion on the fluidity between trading and investing and avoiding strict labels.
Explanation of three main investing types: growth, value, and income investing.
Growth investing involves higher risk and potential for higher returns, often in early-stage companies or projects.
Value investing focuses on established companies with proven track records and lower risk.
Examples of value investing include companies like Apple, Amazon, and Bitcoin in crypto.
Income investing involves generating steady returns, often through dividends from blue-chip stocks.
Importance of diversification and risk management in portfolio construction.
Active portfolio management and adjusting risk tolerance are key to investment success.
Upcoming chapters will cover industry heavy hitters and deeper risk management strategies.

Chapters

What are the main types of investing discussed in the video?

The video discusses three main types of investing: growth investing, value investing, and income investing, each with different risk and return profiles.

Why does the presenter advise against labeling yourself strictly as a trader or investor?

The presenter suggests that labeling yourself can limit your flexibility because markets and life are fluid, so maintaining a flexible approach allows you to adapt between trading and investing strategies.

How does diversification help in investing according to the video?

Diversification spreads risk across multiple assets, reducing the chance of significant losses if one investment performs poorly, thus protecting your portfolio.

Full Transcript — Download SRT & Markdown

Speaker A

Okay, week 2, chapter 2, types, or we can also say styles of investing. We are going to go deeper and deeper into the role of investing this week, and we want to kind of know what the possibilities are, what other people are doing, what investing is all about, what sort of strategies I can make for myself, where I fit in sort of the types of investors that you generally find, and how I can just get that finance, my personal finance and my portfolio. How can I tweak that to such a degree that it may actually see some growth? So, slides and browser and some perspectives, the usual structure, structure. Let's just jump straight in.

Speaker A

possibilities are what are other people doing what is investing all about what sort of strategies can I um make for myself where do I fit in sort of the types of investors that you generally find and how can I just get

Speaker A

Where are we now? Week 2, chapter 2, as mentioned, and slowly, slowly we progress, and hopefully you guys are learning more and more. The next chapter is also great, where we're going to look at some heavy hitters in the industry.

Speaker A

where are we now week 2 chapter 2 as mentioned and slowly slowly we progress and hopefully you guys are learning more and more next chapter is also great where we're going to look at some some Heavy Hitters in the in the industry

Speaker A

Now, about investing, there are three general types that you can sort of, you know, box yourself in. But before we look at this, I want to already highlight something that I've just come to realize as an important thing when it comes to investing and trading. You kind of don't want to label yourself, and I guess that's true for many things in life. I personally think the more you label yourself, the more you limit yourself because life is fluid, we are fluid, markets are fluid. So, we kind of want to maintain a fluid attitude, if you know what I mean.

Speaker A

comes to investing in trading um is you kind of don't want to label yourself and I guess that's true for many things in life I personally think the more you label yourself the more you limit yourself because life is fluid we

Speaker A

This goes for trading versus investing, for example. I mentioned before that there are moments where maybe you want to act as a trader, and there are moments where maybe you want to take some higher time frame or longer time horizon positions where you start to enter the domain of investing more and more. I've been doing that myself all the time, where yes, I kind of make a trade or buy. It's mainly a tweak of a portfolio, or something in my portfolio is steady, and I see a huge opportunity that I just want to capitalize on for the duration of maybe four hours, or sometimes it's even like 15 minutes, right, when I'm really actively trading.

Speaker A

Trader and there are moments where maybe you want to take some higher time frame or longer time Horizon positions where you start to enter the domain of of investing more and more and I've I'm doing that myself all the time where yes

Speaker A

One of the things that I'm good at is very short-term time frame price action trading because over the years, after looking at price charts mainly for literally thousands of hours, I've become quite good at recognizing patterns and price behavior and, you know, buyer-seller behavior in that sense. So, there are times when I put on my trading suit, but there are also times when I just want to, you know, put on my investing suit.

Speaker A

maybe four hours or sometimes it's even like 15 minutes right when I'm really actively trading one of the things that I'm good at is very short-term time frame price action Trading because over the years after looking at Price charts mainly for literally

Speaker A

So, why am I saying this? Because, well, there are mainly three types, as I said: growth, value, and income. Growth generally speaking has a higher risk but also potential higher returns. So, we're talking about growth stocks, for example, where we have a small market cap stock that sees potential, you know, like large potential future growth. So, think of companies in their early days that you can invest in. Obviously, when you invest in something when it's still early stage, the risk of a company not succeeding, or a project not succeeding, or in blockchain, a protocol not succeeding, is higher than when it's already established.

Speaker A

want to uh you know put on my investing suit so why am I saying this because well there are mainly three types as I said growth value and income growth generally speaking has a higher risk but also potential higher returns so we're

Speaker A

Now, when something is a bit more established, we can look at something called value investing. So, there is already a proven value to a business. Let's say that you're new to the stock market and you are going to select a few companies. If we were to look at, for example, Apple, Amazon, Tesla—Tesla less than Apple and Amazon perhaps because it's been around for not as long—that would fall more into the domain of value investing. So, you kind of are placing a safe bet, hence the lower risk. There's more established track record already in a company or a protocol.

Speaker A

in something when it's still early stage the risk of a company not succeeding or a project not succeeding or in blockchain a protocol not succeeding is higher than when it's already established now when something is a bit more established we can look at

Speaker A

So, for example, if you take it in the world of cryptocurrency, you can say that, okay, if I place my money into Bitcoin, that could be value investing relative to, say, the newest project that just was launched and promises to be better than Bitcoin, right? That will fall more into the category of growth. So, we are playing around with that sort of thinking and those sorts of frameworks where we have several stocks or just several assets that you know have a different risk attached to them and potentially different growth scenarios for the future as well.

Speaker A

Tesla less than than Apple and Amazon perhaps because it's been around for uh not as long that would fall more into the domain of value investing so you kind of are placing a safe bet hence the lower risk there's more established

Speaker A

So, value investing potentially has lower returns because something is already established. I talked about that before: when a company is already supplying products to the entire planet, you can ask yourself how much growth is there still left? I'm not saying that there's no growth left, but there is potentially lower growth ahead in the next 10, 20 years than, you know, the latest AI company who is revolutionizing internet, blockchain, and everything, right? The potential for growth there may be multiples bigger than something that has already been established for like 20 years, and that's just something that we need to think about.

Speaker A

that just was launched and Promises to be better than Bitcoin right that will fall more into the category of growth so we are playing around with that sort of uh that sort of thinking and those sort of yeah this sort of framework where we

Speaker A

Generally, value investing, Warren Buffett is, I guess, one of the main examples for this. It's taking, finding value in a business or a protocol, and in more modern times perhaps, making a prospect for what the future is going to look like, placing your bets, finding value, and really having that long time horizon to see that potential value also come to fruition. Right? If you want generally those higher returns, you only get that with a lot of time as well. So, it always seems quite easy to people that made these tremendous returns, but holding an asset for multiple years is really quite difficult, especially like a single asset. I'm not talking about index investing right here.

Speaker A

established I talked about that before when a company is already supplying products to the entire planet you can ask yourself how much growth is there still left I'm not saying that there's no growth left but there is potentially

Speaker A

Okay, last one, income investing. So, generally the lowest risk, I would say, just depending on how you look at it. This is a simplistic example, but I think it is accurate: lowest risk but potentially lowest return. So, for example, this would be bonds, but it can also be choosing a stock that pays out a dividend, right? Something that sees steady growth, pays out a dividend, and therefore you are kind of like—it's not passive. I don't necessarily like the term passive income because I think it's hardly ever passive. Of course, there are exceptions, but I know that many people are looking for passive income, and for that reason, I want to first start with the fact that you need some activity before. Anyway, I'm digressing.

Speaker A

established for like 20 years and that's just something that we need to uh think about generally value investing uh Warren Buffett is I guess one of the the main examples for this it's taking uh finding value in a business or a

Speaker A

So, the income investing may very well be an excellent addition to your portfolio where you have like a certain percentage of your portfolio in safer assets that pay out a dividend, where you know that structurally you have some guarantee of making profits.

Speaker A

fruition right we if you if generally those higher returns you want you only get that with a lot of time as well so it always seems like you know quite easy to people that made these tremendous returns but holding an asset for

Speaker A

Okay, so this brings me to a point where this game is all about creativity, and this is also why it's so awesome. It is very personal. So, everybody has a personal, it has a different risk tolerance, a risk preference, and people just like different assets, different styles of investing, and that's what makes it great.

Speaker A

this is a simplistic example but I think it's uh it's it I mean it is accurate lowest risk but potentially lowest return so for example this would be bonds but it can also be choosing a stock that pays out a dividend uh right something

Speaker A

And now I'm coming back to knowing all the assets that you can select from. That's when you can get creative, where a certain scenario in the world, you know, brings it to a point where you say, like, okay, now I'm going to use this instrument to capitalize on that or to protect my portfolio from downside. I use this instrument, okay?

Speaker A

know that many people are looking for passive income and I for that reason I want to first start with the fact that you know uh you need some activity before anyway I'm I'm digressing um so but the income investing may very

Speaker A

So, yeah, active portfolio management, that's what we're working towards. Also, next chapter, of course, we're going to highlight that more and more, and risk management will come back to extensively. But this is, yeah, obviously of paramount importance: your risk management and your risk tolerance. That is, you know, allows you to sort of tweak the knobs of your portfolio.

Speaker A

guarantee of of making profits okay so this brings me to a point where this game is all about creativity and this is also why it's so awesome it is very personal so everybody has a personal uh it has a different risk

Speaker A

Now, portfolio construction will look at more and more. I've just given a very, very simplistic example of how you could think of a potential portfolio in one of the sources. I'll get to that in a second. We have a V.

Speaker A

select from that's when you can get creative where a certain scenario in the world um you know brings it to a point where you say like okay now I'm gonna use this instrument to capitalize on that or to

Speaker A

protect my portfolio from downside I use this in this instrument okay um so yeah active portfolio management that's what we're working towards also next chapter of course we're going to highlight that more and more and risk management will will come back to

Speaker A

extensively but um this is yeah obviously of Paramount importance your risk management and your risk tolerance that is you know allows you to sort of like tweak the knobs of your portfolio now portfolio construction will look at more and more

Speaker A

I've just given a very very simplistic example of how you could think of a potential portfolio in one of the sources I'll get to that in a second um we have a very famous portfolio but let's say that you have a thousand

Speaker A

dollars and then you just want to split it right diversification very important term is spreading the risks the risk over several assets so that you don't put all your eggs in one basket and that when things go south you lose all your

Speaker A

money generally speaking that's very bad practice um there are Exceptions there may be moments where everything aligns and you actually could place like 80 percent of your capital in one asset but that generally you know requires you to be

Speaker A

very knowledgeable of what you're doing and having a very high condition conviction into something really happening so there's no right or wrong uh I I would definitely you know encourage you to explore that for yourself there are scenarios where you

Speaker A

just want to take a lot of risk right when it's sort of like um you know warranted if you will like it's it's okay to do so if you know if everything aligns and you see a huge opportunity I think in the words of Stan

Speaker A

druckenmiller you cannot own enough of it right and and that goes against the general textbook where he said like spread your risk diversification and then sit on your hands for the next 20 years an exception to that I should have

Speaker A

turned the camera giving you some perspective here but um like an exception I was going to say something I will come back to this it will come back I lost my train of thought there for a second anyway let's

Speaker A

get back to this so let's first ever say that you have a thousand bucks or a hundred dollars whatever your your starting balances doesn't matter um 20 stocks and then you can for example say you know 10 in dividend

Speaker A

stocks where I can you know get a steady return in dividend over time and 10 I dedicate to The Proven companies the Blue Chips right the companies that everybody knows that have a solid track record that have low risk of actually

Speaker A

you know making huge downturns although Facebook recently you know when I rebranded to meta they have had quite a downturn um but that's for example could be a safe bet for 20 of your portfolio I would always recommend to have some cash

Speaker A

on hand even in your Investment Portfolio dedicate some money to cash because if you have an extreme scenario where prices really come down hard you want to have some ammunition please please take that from me when markets turn down uh and whereas in a bear

Speaker A

market and sentiment is absolutely atrocious when you have cash on hand you're going to feel like a like a like a king or a queen right you're going to be sitting there with that cash and you're gonna you know like well let's

Speaker A

see how low we go you know I'm going to buy at the you know at the at I'm going to try to buy at you know at a great area if you don't have cash you just have your Investment Portfolio fully

Speaker A

invested and you see it go down and that's very painful you can get sleepless nights it's it's not fun you know it's it increases the levels of stress but when you have some cash on hand at least you know you can allocate

Speaker A

some more uh and in that way again to turn these uh these knobs exchange traded funds um so a basket of security that trades on an exchange just like a stock does so it's an it's an asset on its own but

Speaker A

it's sort of tracking um like it could be for example a collection of of other stocks so there is for example an Emerging Market ETF so if you believe that you know Emerging Markets are going to be the the next uh

Speaker A

hot thing for the next five years you can allocate for example 20 of your portfolio to an ETF that tracks that so you don't have to do the research into all the individual stocks within the sector of grow uh of Emerging Markets

Speaker A

but you actually just buy the ETF and if Emerging Markets really that sector flourishes then that ATF will flourish too and in that way you can profit from for example ETF it can be an AI ETF can be like Arc invest for example has a

Speaker A

famous One Arc Innovation ETF they they have like one of their biggest positions there is Tesla but there's also some like I think coinbase is in there so you have some AI you have some self autonomous driving autonomous vehicles

Speaker A

uh cryptocurrency related and then they have this basket right they have a collection of assets within this ETF so you don't have to you know maybe dive into Tesla blockchain Etc but you may think that okay well I think there is

Speaker A

growth in that sector for the next 10 20 years so this is your way of getting uh exposure to that now for example 20 cryptocurrency high risk very very high risk assets still um but you know you can allow for your

Speaker A

portfolio at least part of your portfolio to have you know a higher risk tolerance 20 Commodities so I don't know let's let's buy some gold as well gold and uh I don't know earrings or a gold bar if

Speaker A

you can afford it and place it in a safe somewhere so maybe 10 well I think with a thousand bucks you can can buy it like a gold bar but you know if you could you could for example choose to decide okay

Speaker A

20 Commodities of which I do 10 physical I store them in a safe somewhere and 10 again I buy an ETF to to track Commodities so for I was looking at the uranium ETF for example I'm not an

Speaker A

investor I have I don't have that but I was looking at it as a potential interesting uh vehicle for the next uh I don't know five to ten years or something um so this is just one example and I

Speaker A

hope I'm giving my thought process as to how you can structure this and how really the creativity here is is Limitless right you're only limited by or basically by nothing your creativity isn't limited um you can go as you know as adventurous

Speaker A

as you want and of course you can switch that around right if your conviction at a certain moment in crypto is very high switch it to 50 and then restructure uh the other stuff or you know uh that's

Speaker A

entirely you know personal preference I still have lost my train of thought of what I wanted to say before um anyway maybe we'll come back to that otherwise I'll probably think of it you know when I leave the room and then uh

Speaker A

we'll do it in the in the lecture um perspectives well why don't we first go to the browser actually um yeah so um Investopedia again the usual suspect uh one thing I wanted to highlight from this source is the entire idea of

Speaker A

speculation versus investing this is actually what I this was my my point that I want to make um the more you are knowledgeable of a market or an asset or uh or you have mastered a certain trading technique you

Speaker A

have found Edge or Alpha the more you can really take this stance of uh taking a lot of risk and and and actually you know uh getting to that stage where you you can't own enough of a certain asset

Speaker A

and this you know this is closely related to uh speculating and uh and investing as well generally speculation is seen as gambling that the word comes from actually just to observe uh and in that sense we're sort of like all speculators

Speaker A

but generally has got like this connotation of being a gambler now investing and trading if you are not ex the less experience you have and the the the the more it is close to especially trading if you enter that arena with

Speaker A

zero experience that's when you're close to gambling you kind of don't know what you're doing and it's either up or down so you know basically you are it's not entirely like a correct analogy because the cards are not necessarily stacked

Speaker A

against you like in the casino um but um yeah so the more experience you have the more you can really uh step away from this whole gambling factor and this goes for trading as well the better you get the more Edge you will develop and

Speaker A

the more money you will uh the more money you will be able to make okay so just that on uh on speculation so just read again read through this um stocks bonds investment treasure I just want you to get to you know

Speaker A

familiarize with all these um you know all these types of investing just the just again you know like making sense of the landscape that is ahead of us another thing Venture versus uh stocks and real estate this is a very

Speaker A

interesting art so this is from Angel list remember the uh the guy Naval ravicon that I mentioned and I'm going to round up after this um I will try to keep it short again but um like venture capital is really like I

Speaker A

said an industry on its own and you know if you can get into this direction that that is absolutely amazing is you like the earliest stage investing where somebody comes with an idea uh and you give them the money and it's obviously

Speaker A

very high risk they very often is like you know the VCS that invest in 50 projects maybe 45 go bust three are mediocre and two are you know uh are decent of which one uh actually explodes and that has like the 100 or 200x or

Speaker A

maybe 1000x return and that you know makes up for all the the other ones that were bad that's sort of like how how this game is played um so a lot of you know diversification when it comes to startups so startup

Speaker A

investing but the returns if you do that right obviously the people who are early in Twitter Google Facebook I don't know all those companies uh ethereum for example Peter Theo uh if I remember correctly gave vitalik buterin the creator of

Speaker A

ethereum blockchain one hundred thousand dollars to work with his idea imagine doing that right that's a little bit different than buying ethereum at five dollars or whatever he's probably sold that to uh to us anyway um cool story that was okay so venture

Speaker A

capital is important to understand uh recommendation for a podcast is the all-in podcast they only talk about no not only not only talk about this stuff but they talk a lot about uh venture capital and they're all millionaire

Speaker A

buddies and they're very interesting and fun conversations very very good to listen to those smart individuals um so portfolio management we have a couple of sources here I talked about that already a little bit uh right so let's let's leave this for this

Speaker A

portfolio manage I think speak for itself that requires some research on your end to see what works for you to see how that goes how you can tweak your uh the knobs and how you can use that you know to

Speaker A

your advantage uh the difference between trading and investing if I haven't highlighted it enough yet already these are some basics in again the plain bagel a decent Source I would say good source and um yeah just to get that perspective in

Speaker A

between but again fluidity people really and I think if you uh spend a lot of time learning about investing but also trading you can really play around you start to become like uh you know like you're sitting there with your capital

Speaker A

and it's like okay I can do this there I can do this there and this there and this there and over time I promise you you will outperform uh The Benchmark it's really really possible don't let anybody tell you otherwise okay uh Ray

Speaker A

dalio another heavy hitter the all-weather portfolio so again a good source and it's just interesting to know about how an all-weather portfolio is structured so one thing that I didn't do in the slides for example is incorporate bonds right that's generally not very

Speaker A

accessible to uh the you know the the average investor also not that interesting if you're working with a few hundred dollars uh that gets more interesting if you get to larger amounts of capital but it's important to know

Speaker A

what this all-weather portfolio is because it is quite famous Ray dalio is super famous and I want you to get familiar with his work as well speaking of bonds uh William gross Bill gross the bond King labeled I hadn't

Speaker A

heard of him actually to be you know completely Frank before selecting the sources but then I dove in and then it's like okay wow this is really cool and this is the same as like Bill Eckman these guys make trades where you just

Speaker A

think like how can you see that opportunity right like how do you do that it's just absolutely fascinating to it to see so there are some examples in the uh in the podcast this is the advanced source so not mandatory this

Speaker A

does go a little bit deeper but since we can't spend that much time on bonds and on each individual topic this is your way into getting a little bit more uh to know more about the bond market okay so uh I think uh I'm not sure how

Speaker A

long I'm 20 minutes okay I think that's still sort of acceptable I'm going to round up within the next uh 50 seconds um I think I've given some perspective already um this game is really about creativity and the more you have these tools in

Speaker A

your tool belt the more creative you can get and that allows you to spot opportunities that other people simply do not spot there's people that didn't spend uh that much time to learn about this stuff to really you know see how

Speaker A

market dynamics work what you can invest in where you can put your Capital because um I'm not going to round up because I want to give one more example actually um and it allows you to um capitalize on events that happen in

Speaker A

the world right covet is a good example where uh yes there was total panic and a market crash but there were stocks that actually performed Ultra Ultra well for example Netflix and zoom right where you get to this into the situation where

Speaker A

everybody's locked inside their homes but businesses need to keep on going right so Zoom calls where all of a sudden like they exploded the stock exploded um and that's a way to if you can capitalize on that so instead of you

Speaker A

know for example the 20 cash would be at that moment excellent to to allocate to something like Zoom or Netflix because I was one of the people for example that expanded their Netflix account to a family account because while the entire

Speaker A

family was at home and why not you know I'll watch sort of well they didn't watch Netflix all the time but and I'm sure many many people and many other people did that as well um and so that's a way of like okay you

Speaker A

have this Market instrument at your disposal you know your way around it you know how to how to allocate your cap so where to allocate your capital and what instruments to use and in that sense you are becoming a master of your money

Speaker A

right you're you're actually working with your Capital to protect yourself from this you know Annoying inflation and you actually you know capitalize on opportunities I think that's more than enough um because this is getting quite lengthy 22 minutes uh and yeah we'll see each

Speaker A

other in the next one where we are going to look at strategies we'll look at more and more strategies also in the lectures and we'll talk about this in Discord plenty uh and we're going to look at you

Speaker A

know copying the grades should be fun

Topics:investingtypes of investinggrowth investingvalue investingincome investingportfolio managementrisk managementtrading vs investingpersonal financediversification

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