The Smart Investors

Investors can manage their investment portfolios by adopting one of active strategy or passive strategy.

Active strategy
The active strategy of managing portfolio involves periodic review of the stocks in the portfolio. The advantage of this strategy is that regular revision reveals opportunities that the investor can take advantage of. It may also reveal those stocks that need to be sold because of a deterioration of fundamentals. Transaction costs are incurred because the investor may buy or sell some stocks.

Passive strategy
The investor buys stocks and he does not revise the portfolio. The portfolio will reflect the performance of the stock market- it does well in bull market but poorly in a bear market.
The transaction coat is low here but the investor cannot identify opportunities to be taken advantage of.

That depends-articularly on the investor's goals. Active strategy provides more opportunity for better returns in my view, but passive strategy is a good bet for those who want steady growth say, for a period of 20 years and beyond.

That depends-articularly on the investor's goals. Active strategy provides more opportunity for better returns in my view, but passive strategy is a good bet for those who want steady growth, say, for a period of 20 years and beyond.