January 25, 2019

Our investment performance 2018 - Not all losses are equal



Unlike many other financial research companies, we at Obermatt use our own money to buy the shares we recommend in our blog posts. How did our shares perform since last year? The following chart shows the value at the beginning of 2018 as a blue bar and the current value in January 2019 as a purple bar.

Performance 2018

At first, the results shows a devastating effect: no matter which currency we look at - each one suffered heavy losses. Our investment in Swiss francs fell by as much as 13%, compared with 10% in Euro. That's a loss of almost 50,000 Swiss Francs. So if we hadn't invested, we would have been 50,000 Swiss Francs richer.

Should we stop investing? Many investors do exactly that. But does that really make sense? No! After all, those who drop out of the race after a loss also miss out on the profits from better years. And we all know that it is impossible to only be around for the good years.

Of course, we at Obermatt also hate losses. But how do we deal with it? The simple answer: We don’t just look at the short period in which the loss hit us, but look at the entire period of our investment.

Performance 2018

With this perspective, the result looks quite different. In the second figure, we included all the money invested in our analysis, i.e. all our four investment periods. That was four times 100,000 Swiss Francs each based on the current currency value. In other words, 403,102 Swiss Francs. And look: we made a profit in all currencies!

With the Swiss Franc, it's just under a percentage point. This is a far less dramatic result than from just the perspective of 2018. And if we look at the other currencies, according to the same principle, the difference becomes even clearer: our investment in Euros rose by almost 30%, in Pounds Sterling and US Dollars even more.

It may be that some Swiss people are thinking that with the increased Euro, US Dollar and Pound that: "The strong foreign currencies are perhaps good for their respective countries, but bad for us".

Wrong again! We invest for a certain reason: namely to have the money available for consumption at a later date. And it should not only be available in local currency. Don't forget: 50% of the Swiss economy is based on imports! A vast amount of Euros, US Dollars, currency services, and other products are bought.

There are therefore two things to consider when measuring performance:

1. Always have a longer period in sight when investing

The longer you let your investment mature, the lower the risk of loss in relation to the entire period of the investment. This is due to profits and dividends. Companies make profits and in return pay dividends. This makes losses less likely.

2. Always have foreign currencies in mind

Due to the close economic ties between countries, not only domestic currency is will be needed when you retire. If you make money in other currencies, this is also a good indicator of long-term profits.



We buy the stocks we discuss and openly publish the returns of our portfolio. That's how much we believe in our stock research. Subscribe to the top 10 stocks for 100 markets conveniently by e-mail.

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Analysis drives Performance