Investing term

What is Active investing?

Picking individual stocks (or actively-managed funds) instead of just buying the index.

Active investing means trying to beat the market by picking individual stocks or timing your buys and sells, rather than simply owning the whole index and holding. It can outperform, but it demands time, skill, and emotional discipline, and the odds are humbling — the more you trade, the more costs and mistakes eat in.

For example

Choosing to buy three specific companies you've researched, instead of one fund that holds all 500, is active investing — you're betting your picks beat the average.

Active investing is taught hands-on in Stage 13 — Active Investing: Should You Even Bother?.

See the lesson →

Related terms

CatalystThe event or condition that will close the valuation gap — and an estimated timeline.Circle of competenceThe set of industries, business models, and types of companies you actually understand well enough to evaluate.ConvictionHow strong your evidence is for a thesis — and therefore how much capital it earns.Decision journalA pre-trade written record of your thesis, sizing, and what would change your mind.
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