November 25, 2016

Review 2016+: Undeserved profits in the portfolio



This summer, we used our method to invest 100,000 Swiss francs in a total of twenty stocks. Last week, Dr. Stern took a closer look at the losses, and this week he will talk about the profits.

Valora had the biggest increase in value. He bought Valora because they were on the Top 10 list and because a friend who loves trading stocks has been a fan of Valora for a long time.

Should you listen to your friends when choosing stocks? Yes, as long as you follow this important rule: "Never put all your eggs in one basket". That means you invest three to five percent of your total investment budget in each individual stock, just like Dr. Stern is doing with his portfolio. If the recommended stock also has a good rank, then go for it!

BASF, Conzzeta, Amadeus, Airbus, and Yara are other stocks that were profitable for him this summer.

Does he deserve these profits? No, because Valora was a tip from a friend and BASF had to deal with a fatal accident in one of their factories.

You don’t "deserve" the profits in your portfolio, just like you can’t do anything about the losses. The profits come from other investors who were willing to pay more for their stocks. Just be happy about that.

Profits and losses of individual stocks aren’t really that important. As long as you are diversified, you can expect similar returns to those of the overall market. And after all, that is what most people want from stocks, provided their lives don’t revolve around investing.

In the long run, you can expect your stocks to increase in value because the legions of managers and administrative boards have only one job: to generate a profit for you as a shareholder. That’s how the law intends it and that’s how most managers think, otherwise they would have chosen a different job.



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