From the author:
3 Criteria for the selection of shares
In times of zero interest rate policy and global uncertainty, many investors are turning to gold. However, I advise you to count on living gold. By this term I mean stocks. Unlike gold, a well-chosen stock pays dividend income. And how do you find the right stock? As a money sovereign you use your acquired expertise and also check with common sense, whether the following three criteria are met:
- A public limited company must produce demanded and successful products or provide services.
- She has to pay her employees well and treat them the same way.
- In addition, it has to earn a dividend for its shareholders, which is not paid out of the company's substance and is only partially distributed in order to continue investing.
What is a stock?
Shares are securities. A share represents a share in the company. All shares together form the company's share capital. With the purchase you become a partner. You participate in the profit through the dividend payment. The undistributed portion of profit increases with the price increase. And what are the components of a share?
Let us analyze a concrete example of what a stock contains. Let's take the BASF share: the company produces and sells worldwide. It has land, buildings, operating equipment, operating and business equipment, vehicles of all kinds, etc. The workforce and the management come to this. All this forms a unity which can also be called a symbiosis, since it is an advantage for all partners, employees, management, customers and shareholders.
Shares, the "living gold."
Equities are therefore something very special, a product that is always reinvented by changing, exchanging or improving all parameters, if necessary. Shares are shares in the steady change of the economy.
That's why I refer to stocks as "living gold!" - “Gold” because for me the stock is the best long-term investment there is, “alive” because everything is constantly in motion, because companies are constantly reinventing themselves, i. H. have to continuously adapt to the circumstances.
8 Tips: What you should know about the stock
- The Annual General Meeting: The Annual General Meeting (AGM) is the meeting of shareholders to take resolutions. It elects the members of the Supervisory Board and grants them and the Management Board discharge. It decides to pay a dividend, adopts resolutions on the agenda, amendments to the charter, capital increases and much more.
- The dividend: The dividend is generally defined as the cash dividend. There is also the stock and the natural dividend. The stock dividend is offered by the companies to keep the money in the company. Instead of cash the company offers shares. So you are stagnating your stock. The shareholders will receive the natural dividend at the Annual General Meeting. The breweries offer swimming pools, others a bursting buffet.
- Free or bonus shares: These are shares which the shareholder receives without additional payment, that is to say free of charge. They often come from a capital increase from company funds. The company converts reserves into share capital.
- Bonus shares: In the case of the bonus share, the shareholder receives the dividend-loyalty shares - possibly for a specific holding period. They do not come from a capital increase from company funds.
- Stock Split and Share Buyback: The companies carry out so-called share splits. That is, the issued shares will be withdrawn and more new shares will be issued for them. A split 1: 2 means: For one old share the shareholder receives two new shares. That means for you z. B. Your forty shares become eighty shares. At the same time the course sinks z. B. from 110 to 55 €. The main one Sense is to make the market value lower. A share buyback is the opposite of a split. It is done to increase the dividend yield.
- capital increase: In the event of a capital increase, new shares, called “young shares”, are issued. As compensation, the existing shareholder receives subscription rights that he can use to buy new shares or sell them on the stock exchange.
- Spin-off: In the case of a spin-off, the company breaks down a part of its company as an independent company. As a compensation, the shareholders receive free shares of the new company.
- Fusion: The merger, also called merger, is the merger of two (or more) independent companies.
The fear of the Germans before shares
What do not German investors say: they have a share of energy. They avoid risk because they do not want losses. When buying property, the Germans have very clear ideas. First, money must be saved. During the accumulation process, thoughts develop over the building.
How big should it be? Where and what should be built? A house or a condominium? The client waits patiently until the equity capital is available. Then it is built or bought. His investment approach is well defined and has only one goal: one's own use. During the use phase, he is not interested in whether his property is valuable or worthless. His patience mutates into persistence.
This is precisely the virtues that the Grandmaster of the stock exchange, André Kostolany, had already defined for the successful purchase of the shares, the three great G: money, thought, patience.
8 Tips: How To Analyze Stocks Correctly!
The Germans are definitely misled. Look at the sample depots, which are published in well-known newspapers and magazines. All aim only at the price gains. I have never seen one that is based on the dividend.
Added to this is the short-term observation period: fund of the month or periods between one, two or three years. The maximum duration over the average term is still to be reported. However, this is not appropriate to the full extent and long-term value of the share.
- Purpose of a joint stock company: A public company has to satisfy its customers. So offer popular, successful products, such as B. The following companies: You will find Coca Cola and McDonald's on almost every corner. Take a look around your own household, e.g. B. in the bathroom: Who are the manufacturers of your consumable products?
- Selection of shares: When selecting stocks, you can get a good understanding of your business and forget the typical analysis methods - chart analysis, stock analysis, technical analysis and everything else. For professionals, they may be important for you as a private investor. You do not have to hit a benchmark or an index, and you're not competing with anyone.
- Criterion employee satisfaction: A stock company must properly pay and handle its employees. Social services, employee participation and further education are nowadays an indispensable prerequisite for committed, loyal and satisfied employees.
- Why dividend is important: A public company must generate a dividend for the shareholders. Here the emphasis is on earning. If the dividend is paid out of the substance, as Telekom has done for years, this weakens the capital base and the confidence in the stock.
- Consider the business model: A company that has already paid a decade-long dividend and is still increasing it year by year has a thriving business model and will not be so fast. A stock company has three important functions. If these are not met, you can assume that your business model does not or does not yet work or is not sustainable in the long term.
- Consider the substance payment: A clear sign of a substance payment is the tax exemption of the dividend, because this is a capital repayment, not a dividend earned
- Inertia: is asked. If you have selected and bought your shares according to the analysis described above, there is no reason to be nervous about stock market fluctuations.
- Change your target approach when buying a share: Instead of capitalizing on profits, dividends must be in the foreground and you should develop the same patience as you would for a property you use.
3 Tips: Speculation - but right!
Speculation is the assumption that we can look to the future. The punter speculates on a change in his favor. He believes he knows how a security or currency evolves to gain a financial advantage in the future. Speculation may be directed towards rising (bullish speculation) or falling prices (bearish speculation).
The desire to benefit from fluctuations on the stock exchange, special tips or supposed developments is great. I advise you to develop equanimity. If you absolutely want to speculate, proceed as follows:
- Set up an extra depot / account.
- From the outset assume a total loss.
- If your speculation goes up, take out the capital invested. Then you only speculate with money won. The loss is not as painful as that of one's own capital.
8 tips: What do I have to consider when buying shares?
What you should know: Private investors are often disadvantaged when buying. The initial subscription will take place before the first stock market listing, mostly without the private investor. Then the Erstzeichner have already made cash. Especially at the beginning, the banks support the course if necessary. When it comes to knowledge about the stock market candidate, the private investors are disadvantaged. Big investors have a direct line to the management team and analyst research is not yet available.
- Never buy new ones! You should only buy shares from companies that have existed for a long time. This excludes the purchase of new emissions.
- Always buy with a limit. Because the stock market fluctuates and there are big upheavals, it only protects you a limit.
- Do not fret: Do not fret if the purchase fails. The next chance comes.
- No partial purchases: Do not allow partial purchases. Complete partial purchases, otherwise pay the double or triple charges.
- Time for the order: Give the order an appropriate time horizon because you are in no hurry. It should be three to four weeks.
- Stock exchange: Choose the right stock exchange. This is the one where the share is most traded. In Germany it is almost always Frankfurt.
- To buy at the home exchange: If there is little trading in foreign stocks, buy them on the home exchange, e.g. B. in London or New York. The cost is a little higher. But that only plays a subordinate role for a long-term investment.
- No lump risk: Avoid a lump risk. As much money as you invest in a property, you will never spend on a single investment. This is the problem of many. They are millionaires because their real estate has reached an enormous value over decades. They have Betongold, but they have no liquidity. Think about how to diversify your money. With stocks, bonds and fixed term deposits, you are always liquid. Another lump risk is created by investing in just one currency.
8 Tips: What do I need to consider when selling shares?
For the sale of shares essentially the same conditions apply as for their purchase:
- Sale with limit: Always sell with a limit.
- No partial sales: Do not allow partial sales.
- Time for the order: Give the order enough time (several weeks).
- The right stock exchange: Choose the right stock exchange.
- Avoid clumping risk: Please ensure that the sale does not result in a lump risk.
- Only sell in case of need: A stock sale only takes place if you absolutely need money. Otherwise, keep your shares faithful and look forward to the dividends.
- Equities are also ideally suited for retirement provision: Forget the silly rule “hundred minus age is the proportion of shares in the portfolio”. A pensioner will not sell his shares at one go.
- Liquidity cushion: What is needed is only a liquidity cushion, which makes it impossible to sell in case of weak stock market data.
More knowledge - PDF download, eCourse on demand or personal advice
Offline download: Download this text as PDF - Read usage rights, Because we do not automatically submit the title of this text for privacy reasons: When buying in "interests" the title register if support is needed. After buying text exclusively Download at this URL (please save). Or for a little more directly an entire book or eCourse with this text buy, read on.
Read customer feedback and buy a book on this topic at a discount: Do you like this text and want to read more information about it? Buy the right book including this text, buy it here in two languages, as a member even with a 20 percent discount. Would you like to take a look at the book first? You can do this by previewing the book look at and then purchase on the book page.
German edition: ISBN 9783965964389
English version: ISBN 9783965964396 (Translation notice)
Your eCourse on Demand: Choose your personal eCourse on this or another desired topic, As a PDF download. Up to 30 lessons with each 4 learning task + final lesson. Please enter the title under "interests". Alternatively, we are happy to put together your course for you or offer you a personal regular eMailCourse including supervision and certificate - all further information!
Consultant packages: You want to increase your reach or address applicants as an employer? For these and other topics we offer special Consultant packages (overview) - For example, a personal phone call (price is per hour).