It’s always surprising how many amazing companies in the north are incredibly cheap. Why might this be? This time, our video editor, who is studying engineering, found the company SKF on the Swedish Top 10 list.
Engineering is important, especially because computers are automating more and more jobs. The choice makes sense to our CEO Dr. Hermann J. Stern, so he's buying SKF for five thousand Swiss francs.
Why so much? Because it’s 5% of his portfolio and because he buys every stock in an amount that is 5% of the overall portfolio value. This approach ensures that the portfolio is diversified and more secure than if he focused on fewer stocks.
There are investors that think diversification is stupid because it stops you from achieving high returns. That might be correct, but for Dr. Stern, security is more important than returns when it comes to his retirement savings. He is taking enough risks with his own business.