Do you recall your first months as a newly licensed investment professional? Perhaps you were given a desk, a telephone, and some business cards and told to develop a book of business-the sooner, the better.

If you were like most new investment professionals, those first months marked a period of experimentation with different methods of landing clients-and with selling the full menu of the firm’s products: stocks, bonds, annuities, partnerships, options, funds, and so forth. Even the stocks you followed and sold were probably all over the map-growth stocks, high-dividend stocks, initial public offerings-depending upon the prospects you uncovered and the recommendations of your research department.

Most new investment professionals go through this stage of experimentation during their first months or years in the business, trying many different financial products, seeing how prospects and clients respond to them, and observing how the products themselves respond to changing market conditions. Over time, however, most investment professionals emerge from this period with a firmer sense of markets and of what is best for their clients, as well as which types of products they feel most comfortable in recommending. Many professionals develop clear and identifiable investment strategies that guide and sustain them over long periods and through market changes. For many, their businesses as investment professionals are based heavily upon the strategy with which they become associated.

This module is about investment strategies. It discusses the importance of strategy and explains several different strategies that have proven themselves over the years. The space limitations of this module dictate that treatment of these strategies be more descriptive than detailed. You will nevertheless see their general frameworks, and you can refer to the references at the end of the module for sources of further reading. Virtually all of the great investors of this century have had a clear strategy, and each of those strategies is described in books that are readily available.

Many strategies seem intuitively sensible, but we should always look for empirical evidence of their value. Fortunately, modern financial scholars have tested these strategies, and the findings of many of those tests are presented on the pages that follow.

Author: Jennifer Coombs

Jennifer Coombs is an associate professor at the College for Financial Planning. Prior to joining the College, Jennifer spent a decade working in the financial services industry in New York City, with a special focus on equity research and analysis. She holds a Bachelor of Science degree in Finance and Political Science from Clarkson University. You can contact Jennifer at

Complexity Level: Intermediate