Active and Passive Strategies for Investing

There are two main methods for investing in stocks and they are called active and passive management. The difference between them has nothing to do with how much you are active or passive. Active investors get to choose their own stocks, bonds and other investments; whereas passive investors leave their holdings follow an index created by some third party.  As a successful businessman with over 25 years in the investment management industry, the CEO of Willow Creek Capital Management has gained an in-depth perspective and knowledge of how investing works.

When people talk about stock investing, they usually mean active investing. Most people may think that this in fact is the superior strategy, but that isn’t necessarily the case always. On the long run, most actively managed stock funds have underperformed S&P 500 index, the most popular and prominent benchmark for index funds. "That’s way many people prefer to go with an alternative to active management. Some people just want a return, nearly the same as they invested" - says the General Manager of Willow Creek.

Once you’ve put your finance in control and you’ve set clear financial goals, you can start learning how to begin your investment process. According to our sources in Willow Creek, a private hedge fund company, for those who use a mutual fund, the process is pretty easy. All they need to do is contact the fund company and ask them to open an account. However with stocks, things get a little trickier, and there a more steps to it.

In the America the biggest exchanges are the New York Stock Exchange, the Nasdaq Stock Market and the American Stock Exchange. Although there are differences in the way various exchanges handle trades, buying and selling shares on any of them involves a similar process.

The Willow Creek Capital Management professional investors explain that the price that buyers are willing to pay for shares is called “bid,” whereas the price that sellers are willing to accept and sell their shares for it is called “ask” price. The difference between these two prices is called the “spread” and it usually ends up in the pockets of exchange professionals who handle trades. Exchanges bring both buyers and sellers together.

Read more about Willow Creek Capital Management on their website or connect with them on Linkedin.