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Next step: What shares should you select based on your stock analysis?

If you have identified your recommended stocks with the free Obermatt Stock Screener, you will have them ranked in the results table. At the top of the ranking, you will find the shares that best meet your investment criteria. Depending on your investment needs, you can select one or several of the shares for purchase. Additionally, you can use other data sources to further analyse your shares. Please remember that Obermatt bases the calculations on publicly available financial data and the results do not represent advice from Obermatt.

Prior to this step, we recommend reading about the Obermatt stock screening and analysis, the overview of usage samples and the additional samples.

Delete unwanted shares

The results table ranks your stock recommendations on the combined rank of your investment criteria. The higher the combined rank, the better the stock meets your investment criteria. If you find individual shares that you do not want, you can also delete them from the results table.

There can be different reasons for deleting individual stocks from your results table:

You already own the stock
You want to avoid the industry (e.g. for ethical reasons, you see little future growth in the industry, etc.)
You want to avoid the company (e.g. you are critical about the management or the product)
You don’t want to invest in special investment vehicles such as pure holding companies, hedge funds, real estate trusts or private equity firms because you focus on direct investments only

Compile a diversified stock portfolio

Many finance experts believe that a portfolio of 20 to 30 shares achieves most of the benefits of diversification and that larger portfolios only have diminishing diversification benefits.For passive investors who want diversification, generally 20 to 30 shares should be selected. For larger investment volumes, the number of shares could be expanded.

Equally weighted portfolios tend to be more broadly diversified than weighted portfolios. From this perspective, it is recommendable to hold the selected shares in equal proportions. If weighted portfolios are preferred, for example with larger investment volumes, the individual weights could be researched through third party sources such as Google Finance.

Adjust an existing stock portfolio

Whether you have used the Obermatt stock analysis before to evaluate your portfolio or you are using this for the first time, you may find that the results of the Obermatt stock analysis differ from your holdings. This may be the case when company financials or other performance indicators have updated or changed. If so, you may want to reconsider the worst stocks in your portfolio, namely the ones at the bottom of the combined ranking, based on the current stock analysis. Or, there may be new shares for you to consider buying. These will be the shares at the top of the combined ranking based on your current investment criteria.

How often to repeat the Obermatt stock analysis

Investors always decide themselves when they want to buy or sell stock. The following recommendations are based on cost considerations only and may need adjustments due to special circumstances.

Generally, we recommend replacing the stocks in your portfolio at longer intervals. The more shares you buy and sell, the higher your administrative costs will be. From a cost perspective, this might mean not adjusting more than half your portfolio each year. In many cases, longer holding periods result in lower administrative costs and higher net returns in the long run.

The Obermatt stock screener is updated whenever new financial data is released, usually on a quarterly basis. You can repeat the Obermatt stock analysis as often as every 3-4 months or even revisit it annually. Even if you analyse your stocks frequently, it may still be advisable to only adjust a small portion of your portfolio.