The Difference Between Being a Systematic and Reactive Investor

The way you address your portfolio to accommodate losses and gains during economic changes, stock market drops or gains and other factors affecting the value of your items show if you’re a systematic or reactive investor. 

A systematic investor is one who has a well-balanced set of stocks, bonds, equities and other financial instruments that have a predicted amount of loss and predicted amount of gain that endures the worst economic situations. Systematic investors rarely need to adjust their portfolios and only address issues when they go out of hand.

A reactive investor is one who tries to maximize gains while cutting losses by buying and selling financial instruments at the proper time. For every economic, industrial and financial trouble, reactive investors will try to cut their losses by selling stocks and bonds, getting futures contracts, and buying lower stock which they predict would increase in value over time.

There is no better kind of investor than the two listed above except that each one of them offers advantages and disadvantages. Systematic investors tend to get lower gains but they ensure stability when offered long positions for futures contracts and they meet long term objectives, specifically stocks and bonds that hold 20 years. Reactive investors tend to maximize their income by short term deals and goals.