This morning on April 29, 2016, Obermatt CEO Dr. Stern and his team had technical difficulties calculating the rankings and he had very little time deciding which stock to buy. Fortunately, he ran the Swiss Market Index (SMI) Top 10 List today, which he knows well.
The third best entry on the list was ABB, a company that he admires. He didn’t look any further and bought 250 shares of ABB for the roughly 5,000 Swiss francs he invests each week. In the video, Dr. Stern needed only three minutes and seven seconds to make his decision, nothing more.
Is it crazy to buy stocks solely based on a couple of Obermatt ranks? No, it isn’t crazy. Many financial advisors will advise you to buy a popular stock index fund. The SMI is such a fund in Switzerland. If you buy the SMI Index, you automatically buy ABB stocks worth 5% of your investment.
That’s just what Dr. Stern did here. He bought ABB for 5% of his portfolio value of CHF 100,000 (this is the amount he wants to invest this season). If you think buying ABB in 3.07 minutes is crazy, you would also have to say that all financial advisors that recommend buying index funds are crazy.
The benefit of picking the stock yourself? You know what you are getting. For example, Dr. Stern didn’t want any financial stocks or oil companies. Now he has a Swiss stock market investment without the companies he doesn't want. He feels much better that way.