Participating in the Market

Chapter 5 - Participating in the Market

Chapter 5, Participating in the Market, encourages retail investors to invest in the securities markets by taking calculated risks to reap the benefits of long-term value investing. The chapter explains the investment events, like, when to enter and exit the market, and provides portfolio classification.

Never sell a goose that lays golden eggs and never buy a goose that pretends to lay golden eggs.

— When to Sell, Topic 5.4, Chapter 5

Even though investing in equity markets is risky, Progressive Value Investing advises investors to participate in the equity markets by taking calculated risks and strictly adhering to certain principles.

Topics covered

  • 5.1Taking Risk
  • 5.2What to Buy
    • 5.2.1Music Industry
      • 5.2.1-1Music Production
      • 5.2.1-2Music distribution
      • 5.2.1-3Music consumption
    • 5.2.2Candy Industry
      • 5.2.2-1Candy Production
      • 5.2.2-2Candy Distribution
      • 5.2.2-3Candy Consumption
    • 5.2.3Making a Decision
    • 5.2.4Business Cyclicality
  • 5.3When to Buy
    • 5.3.1Timing the Market
    • 5.3.2Early Investing
      • 5.3.2-1Discovery Phase
      • 5.3.2-2Value Growth Phase
      • 5.3.2-3Value Price Phase
  • 5.4When to Sell
    • 5.4.1Making a Case
      • 5.4.1-1Not a Good Business
      • 5.4.1-2Exploring Opportunities
      • 5.4.1-3Productive Assets
  • 5.5Portfolio
    • 5.5.1Classification
      • 5.5.1-1EQ1 Portfolio
      • 5.5.1-2EQ2 Portfolio
      • 5.5.1-3ETF Portfolio
      • 5.5.1-4EQC Portfolio

Summary

The chapter Participating in the Market explains why investors need to invest in riskier asset classes like equities by taking a calculated risk. Investors can decide on which companies to choose to invest by analyzing the Music and Candy industries as an example.

The reasoning behind why investors should not time the market? List of criteria to help investors exit the current investments in good companies.

Finally, the classification of good investment options into four different portfolio groups. The Equity portfolio-1 (EQ1), Equity portfolio-2 (EQ2), Exchange-traded Fund portfolio (ETF), and Equity Commodity portfolio (EQC).