Qualität, angelehnt an Susan Levermann
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A book well worth reading about stock investments was written by Susan Levermann in 2010. The title is “Der entspannte Weg zum Reichtum” (the relaxed way to wealth) and it is perhaps a little misleading since some work does have to be performed in order to walk that route. Available as a paperback for only € 11.90! Ms. Levermann outlines the numerically measurable parameters which, in the past, pointed to above-average performance in the future. Fairly easy to understand: Stocks with a small price earnings ratio, a high equity ratio, a high EBIT margin, high return on equity (and other factors) have a relatively promising future ahead of them as experience has shown. In her book, Ms. Levermann has now developed a list that looks at twelve different aspects of each stock. The checklist I use concerns small to medium sized companies. There is a – slightly – different list for companies with a market capitalization of more than 5 billion euros. Stocks get a point, no point or a minus point for each parameter. Example price earnings ratio: If the price earnings ratio for the current year is less than twelve, there is a point. If it is between twelve and sixteen, no point is given. If it is over sixteen, there is a minus point. I get nearly all the 12 necessary details from the website of CortalConsors. A brokerage account that I created for observation in January 2011 was at about +33% by the end of February 2013. The Dax made about 11% in that time, the S-Dax (which resembles the virtual portfolio value more closely) made +16%. (The brokerage account performance is inclusive of all interim profits/losses, dividends, brokerage account costs). The brokerage account contains between ten to fifteen German stocks (I can only cover the point “analyst expectations” and “earnings revisions” from German stocks, therefore this limitation). Mostly boring, little known, unsexy securities from the second and third row. Often with relatively high dividend payments (although the point “dividend return” does not appear in the list by Levermann). Once a week, I go through the securities in the brokerage account, and about once a month, I replace a stock that has fallen below the minimum number of points (i.e. 3 points or less) with a stock the system has assessed as worth buying (7 points or more). This systematic, regular monitoring and the minimum score to be achieved make for a beautiful, ruthless sell discipline. I consider the risks of such investments manageable. They are probably smaller than with any German stock investment, since (see above) boring, conservative points and no self-deluding market or trend feelings are used for the valuation.
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