So, from a time savings perspective you would want a fund that specializes in home robotics. If one of those exists, though, that suggests that your knowledge isn’t as unique as you’d like.
What I would probably do is find a news website for home robotics producers- a trade magazine is what used to fill this niche, and might still do so- to have a good idea of how relative companies are doing. This looks like a promising place to start, but that gets you as informed as similar investors, and you’d like to be more informed.
Then, try to keep a portfolio that’s fairly balanced in all noteworthy home robotics companies. I’d probably go the ‘buy and hold’ route- try and keep your portfolio roughly apportioned relative to market share by buying up shares of companies underrepresented in your portfolio every month. This is the ‘indexing’ approach- basically, you trust that the home robotics market as a whole will go up, and that the market is better at predicting who will go up than you will.
If you’re more confident in your ability to predict trends, you want to hold companies relative to their expected market share at the end of your trading period- to use an old example, the first strategy would have you holding lots of Blockbuster and some Netflix and the second strategy would have you holding lots of Netflix and some Blockbuster.
There is a giant obstacle here, though, which is that a large part of the stock price is determined by the financials of the company, which take a relatively large investment of time and energy to understand. If you’re indexing, you basically offload this work to other investors; if you do it yourself, you can have a decent idea of what the companies are worth on the books, and then adjust by your estimate of how well they’ll do in the near future.
If I was keeping my porfolio indexed to the market, wouldn’t I be selling Blockbuster shares each month as Blockbuster lost market share? Why would I end up holding lots of Blockbuster?
I apologize, I was unclear; I’m recommending ‘buy and hold indexing’ where you correct imbalances by buying the stocks you have less of with new investment income, rather than correcting imbalances by selling stocks you have too much of to buy stocks you have too little of. This is a good way to invest for individual investors who have a constant influx of investment funds and who pay trading fees that are a large percentage of their order sizes.
If you have a large pool of capital that you begin with, or you want to actively manage money you’ve already invested, then you may want to actively correct imbalances. It’s helpful to work out the expected value of a rebalancing trade, and make sure that’s larger than the fees you pay (and you may decide to only rebalance once it gets above some larger threshold). Here, you do end up with mostly Netflix- but you bought a lot of Blockbuster when it was expensive, and sold it when it was cheap, whereas the projection investor who knew that Netflix was going to worth 30 times what Blockbuster would be would have put 3% of their money into Blockbuster and 97% into Netflix, and so the majority of their current shares would come from when they put a lot of money into cheap Netflix stock. I haven’t heard about that sort of projection investing playing well with rebalancing- and if I remember correctly, it was designed for allocating a large pool which you have complete access to, rather than doing dollar cost averaging with a constant income stream.
So, from a time savings perspective you would want a fund that specializes in home robotics. If one of those exists, though, that suggests that your knowledge isn’t as unique as you’d like.
What I would probably do is find a news website for home robotics producers- a trade magazine is what used to fill this niche, and might still do so- to have a good idea of how relative companies are doing. This looks like a promising place to start, but that gets you as informed as similar investors, and you’d like to be more informed.
Then, try to keep a portfolio that’s fairly balanced in all noteworthy home robotics companies. I’d probably go the ‘buy and hold’ route- try and keep your portfolio roughly apportioned relative to market share by buying up shares of companies underrepresented in your portfolio every month. This is the ‘indexing’ approach- basically, you trust that the home robotics market as a whole will go up, and that the market is better at predicting who will go up than you will.
If you’re more confident in your ability to predict trends, you want to hold companies relative to their expected market share at the end of your trading period- to use an old example, the first strategy would have you holding lots of Blockbuster and some Netflix and the second strategy would have you holding lots of Netflix and some Blockbuster.
There is a giant obstacle here, though, which is that a large part of the stock price is determined by the financials of the company, which take a relatively large investment of time and energy to understand. If you’re indexing, you basically offload this work to other investors; if you do it yourself, you can have a decent idea of what the companies are worth on the books, and then adjust by your estimate of how well they’ll do in the near future.
If I was keeping my porfolio indexed to the market, wouldn’t I be selling Blockbuster shares each month as Blockbuster lost market share? Why would I end up holding lots of Blockbuster?
I apologize, I was unclear; I’m recommending ‘buy and hold indexing’ where you correct imbalances by buying the stocks you have less of with new investment income, rather than correcting imbalances by selling stocks you have too much of to buy stocks you have too little of. This is a good way to invest for individual investors who have a constant influx of investment funds and who pay trading fees that are a large percentage of their order sizes.
If you have a large pool of capital that you begin with, or you want to actively manage money you’ve already invested, then you may want to actively correct imbalances. It’s helpful to work out the expected value of a rebalancing trade, and make sure that’s larger than the fees you pay (and you may decide to only rebalance once it gets above some larger threshold). Here, you do end up with mostly Netflix- but you bought a lot of Blockbuster when it was expensive, and sold it when it was cheap, whereas the projection investor who knew that Netflix was going to worth 30 times what Blockbuster would be would have put 3% of their money into Blockbuster and 97% into Netflix, and so the majority of their current shares would come from when they put a lot of money into cheap Netflix stock. I haven’t heard about that sort of projection investing playing well with rebalancing- and if I remember correctly, it was designed for allocating a large pool which you have complete access to, rather than doing dollar cost averaging with a constant income stream.