December 16, 2016

Good reasons for profits - except RWE

Last week, I discussed how I began investing in 2015 and completed my first portfolio of 100,000 Francs in 2016. There were occasional and sometimes heavy losses, but there were also quite a few gains. On balance, the results are positive.

There are good reasons for this. One reason is that stocks pay dividends, which means that even in flat markets, you’ll come out slightly ahead.

When I look at the best performers, their profits make sense to me.

The companies were undervalued according to research by Obermatt and they all operate in useful industries, such as recycling (Umicore, +45%), Portuguese retail (Jeronimo Martins, +39%), fruits and vegetables (Total Produce, +12%), and some more as shown in the video.

These were all good reasons to invest. However, they weren’t the only reasons. I also invested in RWE, a German electrical utility company. After I purchased RWE, one of our followers told me that they were in danger of bankruptcy because of their exposure to nuclear power plants. I am not a believer in nuclear power because I think it is too expensive. Solar power is free and that makes a lot more sense to me.

Did I lose money on RWE? No, I actually made an 8% profit in just a couple of months. Stock prices often don’t make a lot of sense. If you invested in Volkswagen just after the emission scandal, you would be up more than 20% today, despite all the negative news. So don’t worry about the news, just enjoy the companies that you partly own as a shareholder.

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