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Value Investing Switzerland
"An investor without a strategy is like a captain without a destination: he drifts erratically without ever getting anywhere."
An investment strategy is therefore essential for you if you want to increase your money. Today's article about Value Investing, is the first guest article on Schwiizerfranke and especially exciting in 2020! We wish you good entertainment.
The current Crash on the stock markets came as a surprise to almost all investors. A so-called black swan. This is an event that is very difficult to predict and has far-reaching and negative consequences for companies affected. Triggered primarily by the corona virus, highly indebted companies with below-average growth prospects are currently at great risk, as they can hardly refinance themselves in times of shutdown.
However, there is an investment approach that avoids investing in exactly such companies. In value investing, only shares of first-class companies with strong free cash flow and little debt are bought. If you have these values in your portfolio, you can sit out a major correction, because the economic situation for strong companies does not change that quickly.
In the case of first-class companies operating in a future-oriented industry, cash flow will remain stable or continue to grow even in times of corrections in the overall market. In order to identify such companies, a detailed fundamental analysis including the determination of the fair value of the investment is required.
Most investors spend a large part of their time observing stock prices and charts and reading from the data the most favorable entry and exit times. The share price becomes the most important quality feature of the investment. What is actually important, the companies and their products, only play a minor role, let alone company balance sheets, which play no role at all. Unfortunately, however, this procedure does not make it possible to identify suitable investments, as the share price is not decisive for the quality of an investment.
Nor can price developments from the past be carried over into the future. The market functions most successfully for investors with a long-term investment focus. Successful investors are not guided by the price of a share, but by the value of a company.
"Intelligent people learn from the mistakes of others".
We have compiled our top selection for you from all our tests and experience reports:
Most investors spend a large part of their time observing stock prices and charts and reading from the data the most favorable entry and exit times. The share price becomes the most important quality feature of the investment. What is actually important, the companies and their products, only play a minor role, let alone company balance sheets, which play no role at all. Unfortunately, however, this procedure does not make it possible to identify suitable investments, as the share price is not decisive for the quality of an investment.
Nor can price developments from the past be carried over into the future. The market functions most successfully for investors with a long-term investment focus. Successful investors are not guided by the price of a share, but by the value of a company.
The most important rule for asset accumulation and asset preservation is to avoid permanent loss of capital. First of all, one must identify risks before looking at possible returns.
There are a number of ways to determine the risk of a company, an industry or the overall market. For example, a highly cyclical company will be more affected by a global economic downturn and will therefore experience greater fluctuations in profit and cash flow growth than less cyclical companies.
Individual stocks have a higher risk and can fluctuate more than the overall market. Therefore, it makes sense to spread the risk and create a portfolio of different stocks from different industries. Only those who understand and monitor risks will be successful in investing in the long term. It is essential to invest in company stocks whose products are understandable and whose future prospects are convincing. One should only invest in companies where one is convinced that they will still exist in 10 or 20 years and have a higher enterprise value than today.
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As described above, stock prices rarely move in predicted time frames. Patience is therefore an important virtue. It is important to keep your nerves when other market participants lose them.
A intelligent investor invests in outstanding companies when they are trading below their actual value. This is the case in phases of pessimism. When panic breaks out in the markets and the majority of investors cannot sell quickly enough, well-positioned companies are pulled down with the market as a whole. Then the time begins for countercyclical investors, such as value investors. They can then buy excellent company shares at a reasonable price.
When the herd instinct, the short-term thinking traders and the chart technicians keep fuelling the crash, then there can be especially nice moments. Then it is possible to buy company shares at a price below the net assets of the company. This is heaven for investors who think long term. Because after such a purchase, one only has to wait until the market situation calms down and the prices return to their real level.
In the stock market, rational, cool action is the key to success; it is important not to allow yourself to be infected by general panic. As long as there is fear and greed among people, there will be exaggerations and understatements on the stock markets.
Fear currently reigns on the world's stock exchanges and shares are being sold in a panic. Fears of a global recession are rife. Whether global aid packages will calm the situation remains to be seen. It can be assumed that the world economy will be hit hard in the first two quarters of 2020 and a global recession is likely.
But in the long term, the effects will be manageable; we will not go down with the virus. In the long term, zero interest rates and high prices on the bond market mean that there are no profitable alternatives to equities for investors. For those who are not infected by the doomsday mood now, there are some very nice opportunities. We are now back in a time when value investors can buy excellent company shares at a reasonable price.
Market volatility is expected to remain very high. Nobody can predict when the bottom of the crash will be reached anyway. If the corona crisis is overcome quickly and the market rises again, we can look forward to price gains, if the crisis on the stock markets lasts longer, investors with a long-term investment approach can look forward to buying prices.
Bolesch Analysen offers high-quality stock analyses on company, country and sector level based on value investing and is aimed at investors with a long-term perspective.
The aim is to identify the best investment opportunities and thus generate above-average returns.
Did you like Bolesch's piece? What did you take with you and what is your current investment strategy? Please let us know in the comments!
