Title: Meine Strategie
Author: Joachim Brandmaier
This is the third investing strategy that i was introduced to overall. The first was Value Investing, the second Wealth Preservation, and now the third Growth Investment.
It is a German investment book which was introduced to me by an investor I met via an uncle. The strategy centers around investing in strong established companies who have a good track record, and are expected to maintain that in the future of our investment term.
He introduces you to his ‘ruler method’ to measure the growth trajectory of the company for the past few years. You would determine via this method how the avg. growth of the company was maintained over the last few years, and whether it was on a steady path of growth, or whether it experienced some drops that it couldn’t withstand as well as other companies during the same time period.
Some other criteria he looks out for in a a company are:
- annual profits
- minimum revenues of USD 1billion, as well as net profits of USD 100million
- the background of the company is understandable to you and you’re willing to go with the risks in those industries
- diversification in your portfolio should surround different industries, and potentially a few countries with stable economies
As well as giving a lecture on what should be a bare minimum that should be considered for inclusion into your portfolio, he also gives warning to investments we can easily fall prey to:
- not having/ following a strategy/plan
- buying shares in only one company, or one industry
- overestimating your skills and abilities to predict shares future value accurately
- regularly looking at the stock price movements
- buying trending stocks when they are high
Since the value of stocks is driven by shareholder sentiment and not economic activity, one must be careful where to put ones money.
However, the ultimate message in the book (which is the same for Value Investing) is that when we buy shares we should be looking at the long-term, and not short term since the greatest value for the average investor can be acquired in the longer term.
Another way how we distinguish Value Investing from Growth Investing is the timing when shares are bought.
- Value Investing – the investing strategy looks at the share price and earnings history (among many things) and then determines the ideal price at which the share will be acquired
- Growth Investing – the investing strategy suggests you should buy consistently since we cannot determine the ideal point in time when the share price will be in our favour. Therefore, it suggests you should buy regularly, thereby you buy when the price is high, dropping, low and rising, evening out.
Consider long-term investing as an opportunity to participate in the long-term economic success of an enterprise.
However, as much as he suggests you should buy and hold the investment for the long term, he does admit that circumstances do change that may require us to liquidate the investment. However, he tries to limit this to to barely essential circumstances, and not unnecessarily.
Simple reading, and good introduction for a new investor. I would say an investor will still need to read up on different investment strategies to become familiar with different portfolios possible, to find the perfect fit for themselves. However, this is serves as a good intro, and therefore gets a rating of 4,2/5