Aggressive Growth Strategy
Aggressive Growth Strategy
Another strategy that investors are employing to earn greater capital gains is the aggressive growth strategy. One can say that the aggressive growth strategy in stock trading is the opposite of the conservative strategy or the buy and hold strategy. As will be remembered, the conservative strategy involves buying more shares of stock as the stock price decreases. The buy and holders are not looking at the present share price fluctuation of stocks but they focus on the long-term performance of the stock. They believe that the more undervalued the share price of the stock becomes, the better it is for them. They hold the stocks until its stock prices go back to its normal value or it appreciates.
The aggressive growth investors have a different point of view. Instead of buying more stocks when the share price decreases, they buy more stocks when the stock price increases. The aggressive growth investors believe that when you buy stocks on the dips you are merely contributing more to your losses whereas if you buy shares of stock when the stock price increases you can sell those stocks at a higher share price than you bought it. Aggressive growth investors, unlike the conservative investors, do not look in the long-term performance of the stock. They tend to focus on the here and now, which oftentimes means trading at the present share price fluctuations. It is not uncommon for aggressive growth investors to trade frequently, even daily. They believe that selling the stocks when its prices are rising is the best course to take to earn more capital gains. This practice of frequent trading is one of the major criticisms of conservative investors to aggressive growth investors. Conservative investors say that even if aggressive growth investors earn capital gains in the present, their earnings would be greatly reduced by the broker commissions that they are paying for every stock trade.
In my opinion, the conservative strategy and the aggressive growth strategy represents two characteristics in stock trading: risk-taking and playing safe. Both strategies utilize a little of both. In conservative strategy the investor risks losing his investment as he buys more stocks while the stock is in the dips. He wagers his money in the belief that in the future, the share price would appreciate. The aggressive growth investor plays it safe because he immediately sells when the share price increases thereby ensuring that he would immediately earn from his investment.
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