ELI5: Explain Like I'm 5

Investment strategy

Investment strategy is like playing a game where you try to make more money by buying and selling things.

Imagine you have five shiny marbles, and you want to get more marbles. You could do two things: trade one of your marbles for two smaller marbles, or you could keep your five marbles and wait for them to become more valuable before you trade them.

When you choose what to do with your marbles, you're making a strategy. Investing is the same way--you're choosing how to use your money to try to make more money.

One way to invest is to buy lots of different things, like buying different types of toys. This is called diversifying your portfolio. That way, if one thing goes down in value, you still have other things that could go up.

Another way people invest is by trying to predict which toys might become more valuable in the future. They look at patterns, like which toys are popular with other kids and which toys have been popular in the past. They also pay attention to news events and anything else that might make a toy suddenly more or less valuable.

So, in investment strategy, you try to figure out how to use your money to make more money by either buying lots of different things, or by trying to predict which things will become more valuable in the future.