Summary of "Every Investment Strategy Ranked (So You Don’t Waste Your Money)"

Investment Strategies Ranked (From Worst to Best)

F Tier: Speculation Investing

Description: Essentially gambling, often involving CFDs (Contracts for Difference), options, and margin trading.

Key Points: - CFDs allow leverage (e.g., 20x), magnifying gains and losses dramatically. - High risk: A 1% move can equal 20% gain/loss on your capital; a 5% adverse move wipes out the entire investment. - Regulatory warnings (ESMA in Europe) highlight 74%-89% of retail CFD traders lose money. - Academic research (Barber, Lee, Louu, Odin) confirms over 80% of day traders lose money consistently. - Speculation also hides in high-fee manual funds.

Conclusion: Designed for quick wins but mostly leads to losses; considered a wealth trap.

D Tier: Momentum Investing

Description: Buying assets based on recent price trends or hype (e.g., meme stocks, real estate flipping, sector bubbles).

Key Points: - Driven by FOMO (fear of missing out), chasing recent winners expecting continued gains. - Real estate flipping profits fell to a 17-year low in 2025, averaging under 25% before expenses, often resulting in break-even or losses after costs. - Historical bubbles (dot-com, meme stocks, AI stocks) show early insiders profit while latecomers buy at peaks and lose.

Conclusion: Owning assets but ignoring fundamentals; risky and often leads to poor returns.

C Tier: Capital Preservation

Description: Focus on safety and liquidity, including savings accounts, CDs, and small-scale index fund investments.

Key Numbers: - US savings accounts yield ~0.4% (Oct 2025) vs. inflation at ~2.9%, resulting in negative real returns. - FDIC insurance covers up to $250,000 in the US.

Benefits: - Immediate liquidity and safety. - Good for habit-building with money management.

Trade-off: - No real wealth growth, only survival and stability.

Conclusion: Not wealth-building but an essential foundation to avoid losses and progress to better strategies.

B Tier: Long-Term Compounding (Passive Investing)

Description: Buy-and-hold low-cost index funds, e.g., S&P 500.

Key Numbers: - S&P 500 average return ~10% annually since 1926 (7% real after inflation). - $10,000 grows to approximately $80,000 in 30 years, and about $150,000 in 40 years.

Advantages: - Proven by economists and Warren Buffett as the best strategy for 99.9% of investors. - Outperforms most active funds; majority of actively managed funds underperform benchmarks over 10-15 years (per SPA report).

Challenges: - Boring, low risk, steady reward, requires patience.

Conclusion: Best strategy for most people, but limited for ultra-wealthy investors who use more advanced strategies.

A Tier: Active Investing

Description: Long-term compounding with portfolio customization and selective stock picking.

Methodology: - Diversify beyond broad indexes. - Focus on value investing: buying undervalued companies with strong fundamentals (à la Warren Buffett). - Requires skill to distinguish between genuinely undervalued companies and value traps.

Performance: - Most active investors still underperform indexes, but successful ones can outperform and accelerate wealth building.

Conclusion: Slightly better than passive compounding for skilled and patient investors.

S Tier: Ownership and Capital Gains (Billionaire Strategies)

Description: Large-scale private equity, venture capital, and tax-efficient strategies accessible only to ultra-wealthy investors.

Key Features: - Buying entire businesses, restructuring, and capturing exponential upside. - Early investments in startups (e.g., Google, Tesla) before public markets. - US capital gains totaled $4 trillion in 2021, exceeding all wages combined. - Ultra-rich borrow against appreciated assets to avoid taxes (“buy, borrow, die” strategy).

Conclusion: Out of reach for most, but the engine behind billionaire wealth accumulation.

Disclaimers and Recommendations

The presenter explicitly states this is not financial advice, but common sense backed by data.

Encourages avoiding speculation and momentum chasing in favor of long-term compounding or active investing if skilled.
Suggests thinking ahead to advanced strategies (private equity, venture capital) once capital scales.
Promotes an app with expert courses and coaching, including private equity insights from Aram Tagavi.

Presenters and Sources

Presenter: Alux (YouTube channel)
Expert Contributor: Aram Tagavi (Private equity insider)
Referenced Research:
- Academic studies by Barber, Lee, Louu, Odin on day trading losses.
- SPA report on active fund performance.
- Atom data on real estate flipping profits.
- General market data on S&P 500 returns and capital gains.

Summary

The video ranks investment strategies from speculative gambling (F tier) through momentum chasing (D), capital preservation (C), long-term passive compounding (B), active investing (A), to billionaire-level ownership and capital gains (S). It strongly advocates for long-term compounding as the best strategy for most investors, warns against hype-driven momentum and speculation, and highlights the exclusivity of top-tier wealth-building methods.