Value Investing Strategy: Building A Portfolio

In our research on value investing, we have used a book considered by Warren Buffet as the best book ever written on investment. "The Intelligent Investor" by Benjamin Graham is a must read. BTW we are not advertising for Amazon!

Portfolio theory, which is to hold a mix of investment assets, is used by all professional investors to mitigate risk. In investing terms, risks is the threat where your assets will decline in value. The idea behind portfolio theory is "don't put all your eggs in one basket".

If your portfolio allocation is defensive, your assets will be widely spread across the market, which will reduce the risk of your investments declining in value. In modern portfolios of mutual funds, which are generally defensive, they will likely consist of stocks, bonds and treasury bills.

If your portfolio is more aggressive, you will add more risky assets which are more speculative. Graham suggests that like a gambler you should only limit yourself to max 10% of your portfolio to be speculative assets. Hedge funds would often short the market to earn huge profits.

How will this apply to soccer betting? We will examine the possibilities in our next post.