March 29, 2019

The 3 best strategies for expert stock investors



Recently we have given new stock investors 5 important tips to avoid the most common beginner mistakes. Today we have three tips for advanced investors – and for those wanting to get there.

1. The difference between price and value

People are easily blinded by products: whether they are nice phones (Apple), fast cars (Aston Martin) or huge markets (Google). It’s easy to forget that whenever you buy a stock, you’re not buying the product, but a share of the company. The important factor here is how much you pay for the shares. The more famous and popular a product, the more expensive its stock. In some cases you only receive relatively little value for a lot of money – on obermatt.com, Apple has an Obermatt Value Rank of 33 and Google (Alphabet) just 1. That’s why expert investors ignore the prestige factor of stocks and focus on the facts.

2. Be safe

What’s true in relationships or traffic also applies to the stock market. If there is a crash, companies with little funding are the first to go down. That’s why expert investors always check how well a company is funded before buying its stock. Obermatt.com offers both a stock’s value rank (how much value will I get for the price?), and also its safety rank. This rank sometimes reveals surprising facts – supposedly stable companies often have inadequate funding.

Samsung, with an Obermatt Safety Rank of 90, is much safer funded than Apple, with a rank of only 21. How can it be that Apple has such a bad Safety Rank despite all the cash on its books? Debts. Professionals always look on the liabilities side of the balance sheet. The Obermatt Safety Rank makes it easy.

3. Bad news are opportunities to buy

When our favorite clothing store has a sell-out, we are happy because we get to buy things more cheaply. When the stock market goes down, it’s basically the same situation, but instead we start to panic – and sell shares instead of buying them.

Expert investors are happy when the news about the stock market are bad. They know that this is the best time to invest their capital in stocks. They react in an anti-cyclical manner and thus profit from additional returns. The rankings on obermatt.com are anti-cyclical by definition – they go up when stocks lose value, and thereby show the best opportunities for buying.

VW had the diesel scandal. Those who bought VW shares at that time now have a yield of over thirty percent. Why? Because the price of the VW share fell far too much because of the bad news. Today Nissan (CEO scandal) and Toyota (security gaps) have bad news. Their value ranks are therefore very high: 100 and 96, a clear buy signal at Obermatt.

Conclusion: Expert investors are experts because they don’t give in to natural human emotions. They are experts because they stay critical when everyone else is getting excited, and start buying big when everyone else is selling.

Do you want to become an expert investor? Then stay calm and study the rankings on obermatt.com before you buy a stock.



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