February 26, 2016

No Apple in the portfolio - and definitely not Google



Google and its holding Alphabet made the headlines this week because the company was bigger than Apple for a short time. Should we invest in Alphabet? "Never change a winning horse", as they say.

Sounds like a look at the data is in order. Our Value Rating of Apple is a mere 42 out of 100 points. Even Google is better with 47 points.

By the way, Facebook doesn’t have any Value points at all. Everything just hot air or big dreams for the future.

You can get a lot more substance for your money from Microsoft with a Value Rank of 85.

And this is exactly the problem. If you buy high-tech stocks, the only time to get value is when the company has lost some of its sex-appeal. HTC for instance had a high value rank of 94 for many years. However, in this case, this wasn’t really a signal to buy, but rather to sell, because the stock price of HTC has since gone down.

It’s very hard to evaluate high tech stocks. Who would have thought that MySpace will be overtaken by Facebook? Rupert Murdoch and his highly-qualified investment bankers probably didn’t anticipate it when they bought MySpace for more than half a billion dollars in 2005.

2005? That’s not that long ago – and the tech company has since disappeared from the earth.

The same could happen to Google, Facebook and Apple, because IBM, Sun and Microsoft have been flying higher before as well. That’s the reason Obermatt CEO Hermann Stern doesn’t like to invest in technology stocks, no matter how much he likes the products from these companies.

When buying stocks, he differentiates between the products he likes to consume and the companies he likes to invest in, because his retirement savings should be based on established stocks – and not on speculations about a rosy future.



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