Invest successfully in finance: say no, make money

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Text comes from: Des klugen Investors Handbuch: Warum man mit Nein! das meiste Geld verdient und mit welchen Großaktionären man sich ins Bett legen darf (2016) from Dr. Markus Elsässer, published by Münchener Verlagsgruppe (MVG), Reprints by friendly permission of the publisher.
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Internal unrest and daily news are bad advice. The fear dominates. The key to making money is easy to find: the word "no".

Invest successfully in finance: say no, make money sorry

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Dr. Markus Elsässer is considered one of the best bankers and fund managers in Europe.


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Most of the money is earned with the word "no"


Whether you buy or sell. The temptations are on the wayside. Bombarded by daily news from the financial world, many investors are repeatedly misled. The sources of the evil lie in two areas. On the one hand, driven by the fear of missing opportunities, investors are constantly itching to jump on trains. On the other hand, investors are constantly tempted to sell and unnecessarily exit from commitments due to the lurking fear of losses. From commitments that would have been worth keeping for the long term. These phenomena can be observed everywhere: an actionism with fatal consequences for the saved. So nothing big can be built up.

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The old stock market saying "Back and forth makes the pockets empty" was justified. Most of the income in the broker and exchange industry is still based on transaction fees. That means: the more is bought and sold, the more the industry earns. This is particularly pronounced in the United States. Most employed brokers do not receive a fixed monthly salary there. They only get a percentage of the transaction fees their customers earn. Therefore, with a few exceptions, it makes no sense to ask an investment advisor whether you should sell or buy a particular stock. It's like going to the barber shop and asking if you should have a haircut.

Finance learned from scratch


I am lucky enough to have been friends with fourth generation bankers for two decades. There are two brothers, raised in Paris and Switzerland, who are still fully liable with their private bank, including their private assets. Such business people are rarely found in our time. You have always opted for international quality and independence. After the Second World War, they employed 60, today there are 62 people in the bank. They conduct their banking business with care and a lot of commitment. Not surprisingly, the Lehmann crisis in 2008, to which numerous banks fell victim and in which other institutes only survived with the help of politicians, passed unharmed.

From an early age, they listened with pointed ears to conversations between their father and uncle at home, at the breakfast table, so to speak. This way they got to know what was going badly and well in the banking world. One of the principles that was repeatedly suggested to them was: "Boys, never forget, we make more money, saying - no". This simple sentence has it all and hits the nail on the head. For the investor it is like this: Permanently successful investors and entrepreneurs avoid bad and mediocre business. You focus on one area. There, their expertise and competence grow. And they hold out there too. Stamina with know-how is what makes the difference in the end.

The role of privacy in financial decisions


According to my long-standing observation, the root of bad investment is often in the professional or private environment. People who pursue a profession that is often considered repetitive or boring are particularly at risk. For example, dentists and notaries, to name just two professions, are tied to their practice or office space. After a few years in the job they lack real challenges. The monotony of the daily routine is tired.

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Investing money, speculating, offers itself as a flight to another world, so to speak. The thrill of a financial adventure is literally sought out subconsciously. The following scenario can also often be found at home: After many years of family life, family members show little interest in the daily work at the dinner table. There is hardly any praise or recognition left. How beneficial are the calls with the investment advisor or the asset manager? »Yes, he still has understanding, he still appreciates what I do here every day.« And so some successful people, as permanent amateurs, drift off into the financial world. And as a rule, the end result is always the same: in the boom, he buys with full cheeks at high prices. And in a crash, according to 2008 and 2009, he gets very nervous and eventually climbs to market lows. He feels like a beaten dog, unfairly and badly treated.

Have emotions under control


Anyone who ventures onto the slippery trading floor should give up their emotions in the cloakroom together with their coat. Boredom, a thirst for adventure, frustration at work, a vacuum in domestic life - none of this should have any influence on investing and investing. Such deficits should be balanced with other interests: perhaps activating a hobby, playing a sport, learning a musical instrument, getting socially involved in the non-profit sector. From my own experience, I can assure you that my performance on the stock exchange has improved again since I started taking violin lessons at the age of 55. No matter what you choose: For God's sake, just leave your capital alone.

It's not just about the many unnecessary expenses. Constantly investing on every exciting-looking opportunity has far worse consequences. Before you know it, you are fully invested over time. The stock portfolio is overflowing with speculations and commitments that have gone wrong. Most of the time you don't really know why you bought one or the other stock at all. The typical picture of such a depot: nothing about strategic consideration, more like a shelf full of bitten apples. A picture of misery. No trace of wealth accumulation or expansion.

Confidence helps to identify opportunities


Everyone can achieve infinite successes in business and on the stock exchange. It only requires one thing: the knowledge and confidence that you will be offered excellent opportunities in life. But only a few! I see it this way: The art lies in the calm, patiently waiting, looking at the sea and looking for the really big tanker. And then one day when he shows up. He drives past you very close to your eyes. Many investors miss this wonderful moment. Or they just don't see the big tanker. They think a cloud darkens the picture. And in the second step you have to grab and strike. With capital in your pockets, you now have to get on board.

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These are irretrievable moments for which the investor must be prepared. But if you do not systematically maintain discipline and constantly invest in mediocrity, you cannot "strike" at the crucial moment as an investor. It's always the same. At the crucial moment - when the best assets, land, shares and company shares are practically given away in the mega crisis - hardly any investors have liquidity to buy. It is an ancient observation on the stock market: At times of extreme swings, both in the hyperboom of boiling price quotes and in the deepest sell-off crash, the irrationality of mass hysteria lasts much, much longer than you think possible. These are the moments when great fortunes are made.

It is the investors who keep saying "no" for a long time - over the years - who make it big. So again, please: do not engage in occupational therapy with your money, but only take exceptional opportunities! Who cares: Warren Buffett is also convinced of this approach. He doesn't use my picture of the "big tanker". He believes that every person receives a "twelve card" for the journey through life at birth. If you are on the ball, you can score twelve times in life. Buffett and I are optimists by nature and from experience. But as a friend of mine said a long time ago: "The houses on the best properties on Park Avenue in New York are all built by optimists." He is right.

When investing: Always think in percent


Young people in training and at the start of their careers are particularly important to me. It is not easy for them to find the way to invest and invest. They are not taught it at school. But there is a very simple recommendation: Do not think in euros, but in percent.

I keep hearing the argument: »I don't have enough money. It's not worth it for me. For the few euros that come around… ”Well, I know what I'm talking about. I myself was in the same situation as a young person. But I tried it and learned that it is worth investing money on the stock exchange. Here is an example: On 8. December 1971 I bought my first stock. I was 15 years old and my savings were 200 Deutsche Mark (DM). It was a time when there was no smartphone or internet. I wanted to make more of my money. So I studied the stock market prices in the newspaper and did my research as best I could.

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I decided on a mechanical engineering share, the GuteHoffnungshütte share (called: GHH, later part of the MAN Group), which seemed promising to me. I had to issue the purchase order from the payphone during the school break. The share was listed at DM 143,50. Because of the high minimum basic fee, all the fun cost me DM 150,36. As such, I had only expected 1,5 percent expenses for purchases and sales. I had not thought of the minimum basic fee of DM 7. What started out hopefully initially turned out to be a low blow. Because the GHH share had to increase by at least DM 14, so that I would reach the PlusMinusNullLinie. I was really depressed. I had prepared myself so well and had calculated incorrectly. But I was lucky. Within only four months, on the 11. April 1972, I was able to sell the GHH share at the DM 179 price. After deducting the expenses, DM 172,05 remained. I had won DM 21,69. A very small amount (Euro 11,06) that most should have shrugged. "So, was it worth it ...?"

Don't let others irritate you


But I looked at it very differently because I had achieved a remarkable success. A profit of 14,42 percent in just four months! I didn't mind the small amount of money. It was the interest that mattered. I had learned firsthand: If I had been able to achieve a plus of 14,42 percent with one share, I could have done it with 1.000 shares with the same research and work. And that's the nice thing about the stock market. Ultimately, it doesn't matter how much the sums invested. The mechanism is always the same. Everything that you learn with smaller amounts or "practice" in real life will be of great benefit later, when larger sums are available. Percent is percent. So I was lucky enough to gain two insights early in my life:

  • First, it is worthwhile to be successful in your job so that you can save regularly and build up reserves.
  • Second, savings become capital. And capital can become a second pillar of income if you invest it properly.

It was a wonderful prospect for me and it motivated me a lot. Not only my job, but also my capital would "work for me" in the course of my life. And that's how it happened.

So don't let other people's talk that it's not worth it stop you. Try to save capital and then let it work for you. And just calculate in percent at the beginning. Who knows, it can turn into huge sums later. Only patience!

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