The Limited Times

Now you can see non-English news...

Profiting from crises on the stock market – an interview with financial professionals: “Books help you get rich”

2022-04-26T06:04:44.343Z


Profiting from crises on the stock market – an interview with financial professionals: “Books help you get rich” Created: 02/20/2020Updated: 04/25/2022, 16:15 Florian Homm and Moritz Hessel present their new book. © Brandlift "The only book you will ever have to read to make money in any market situation": The authors Florian Homm & Moritz Hessel about their work "The Principles of Prosperity".


Profiting from crises on the stock market – an interview with financial professionals: “Books help you get rich”

Created: 02/20/2020Updated: 04/25/2022, 16:15

Florian Homm and Moritz Hessel present their new book.

© Brandlift

"The only book you will ever have to read to make money in any market situation": The authors Florian Homm & Moritz Hessel about their work "The Principles of Prosperity".

Have you been active in the stock market for a long time?

Or are you, as a beginner, wondering what is the best way to increase your wealth?

Hedge fund legend and ex-billionaire Florian Homm and portfolio manager Moritz Hessel reveal in the book "The Principles of Prosperity - Think and invest like a billionaire" (advertising link) their investment philosophy, which once made Homm a billionaire.

The two financial professionals rely on the "total return" strategy

.

You can find out what this is all about in the exclusive interview with Florian Homm and Moritz Hessel.

Her book is subtitled Think and Invest Like a Billionaire.

So will your book make me rich?

The answer is yes.

It brings wealth

.

In the end, it's all about putting what you've learned into practice.

This book gives you the tricks you need. 

How can I get more wealth thanks to your book?

In order to be able to build, maintain and increase wealth in today's world,

there is no way around the stock market.

We rely on "Absolute Return" or "Total Return" - in other words: positive results independent of market returns, as they are also used by the richest universities in the world such as Yale, Harvard or the best hedge funds, i.e. the top 1 percent of the financial elite .

Together, our team of authors has 50 years of experience in this field and has advised the richest families in the world.

The book helps young people to gain financial independence faster and the freedom that comes with it.

Older investors, who have a shorter investment horizon due to their age, have the opportunity to close their potential pension gap.

Is the book "The Principles of Prosperity" also something for people who have not yet dared to approach the stock market?

"The Principles of Prosperity" is a

timeless standard work

that will hopefully endure for our children and grandchildren.

Although not every chapter is suitable for beginners, we want to make the essence of total return investing and the right way of thinking associated with it accessible to people with and without experience in the capital market.

What is your advice to people who want to become active on the stock market now?

What sources of information do you recommend?

Here we refer once again to the Circle of Competence: Only buy what you understand.

Copying other investors' portfolios is generally not a good idea.

Instead, you should use the actions of very successful investors as a kind of starting point and also do your own research.

Basically, if you just buy ideas that other great investors have already bought after studying them, your margin of error will be a fraction of what you would have if you went out on the prairie alone.

SEC Form 13F is a quarterly report required by the Securities and Exchange Commission to be issued by "institutional investment managers" with control of $100 million in assets under management.

If you type this and the associated investor into your search engine of choice, various sites such as Dataroma will provide you with the current superinvestor positions

.

This means that we only have to check the purchases and sales of our selected investors four times a year and see whether they have bought, sold, reduced or increased a position.

What mistake should investors definitely not make these days? 

The coming years will no longer permit a simple buy-and-hold strategy on the stock market

.

If you look at the last hundred years on the American stock exchanges, there have been very long time windows in which the classic long-only investment style has performed poorly rather than well.

Who keeps their nerves with such a vital investment cycle and also has an investment horizon of a quarter of a century?

The risk that economic stagnation will soon be imminent (or that the current flattening economic performance will solidify) is very likely.

At the moment the market is only supported by the 0% interest rate policy of the Fed and the ECB.

It also now suffers from higher-than-ever debt, an aging society, rising shadow unemployment, supply chain problems, geopolitical strife, and runaway inflation.

You mention the currently high inflation rate.

How exactly does this affect investments in the stock market?

The majority of companies on the capital market will not be able to pass on the increased costs to their customers. Unfortunately, that is the reality and it will be difficult for the broad stock market to compensate.

Aside from the many surprises, stocks are predictable over a 10- to 20-year period.

It is impossible to say whether they will be higher or lower in two or three years.

You might as well toss a coin.

The last long period of high inflation took place between 1955 and the mid-1980s

.

Here, for example, inflation-adjusted gold, commodities and real estate investment trusts (REITs) were the clear winners.

The long/short approach makes it possible to invest long in these assets and at the same time to generate returns on the basis of inflation losers through short sales.

Avoiding price losses is therefore the key to long-term success.

If you sell short alongside long investments, you have the chance to generate consistently positive returns - even in times of high inflation.

This is the total return portfolio strategy.

Secure your wealth now!

Even beginners and investors with little capital can start their asset accumulation cleverly.

Lay the perfect foundation with the book The Principles of Prosperity - Think and Invest Like a Billionaire.

Your book is all about the "total return approach": what makes it different?

One of the most important tools of the total return approach is to buy companies with a market advantage and sell companies with a clear disadvantage in the same or a similar industry.

This process is called "pair trading".

Furthermore, it is important to focus on current trends, such as the technology industry in recent years or some diverse commodities.

The total return investor rarely asks himself what is the perfect timing for his investment strategy, because his portfolio structure results from a

mix of long and short positions

, which overall has a good risk-reward ratio.

When the market collapses, the total return investor almost always loses less than the long-only investor.

The most successful investors who follow this approach even benefit from a crisis.

Even in a sideways market, annual returns of around 10 to 20 percent aren't unrealistic.

This means that the total return approach performs well around 90 percent of the market trend.

Overall, we consider it almost impossible to accurately predict price developments continuously and in every market phase.

Profiting from crises as an investor, even in times of volatile markets?

How is this supposed to work?

What actions do you recommend investors take?

When structuring your portfolio, you should always consider how long or how short you are positioned and with what leverage (the value of your long and short position divided by your invested capital).

So please keep an eye on your risk profile.

Ensure a minimum level of diversification.

You must also understand that in order to continue working with the commodity of money, your capital must be protected by stop-loss discipline.

We have often done well by building up or reducing investment positions in two or three stages

.

One speaks here of scale-in and scale-out, i.e. the gradual entry and exit from a position.

This is because it is very difficult to find the optimal entry point.

In the market, a lot depends on your own intuition.

The long-short approach has proven its worth here.

In conclusion, complementing long investing with short selling will be a must for any portfolio in the years to come to continue generating positive returns.

The most important thing for the next few years is the early recognition of trends and

finding the winners and losers

in the individual sectors. We are counting on rising prices for the winners and falling prices for the losers.

Our book provides a complete guide, which is why it is different from any other investment book. 

There are more and more brokers on the market: should you use several?

How do you find the best online broker for you?

A lot has happened here in recent years, and the price pressure among brokers is immense.

But watch out for hidden fees.

Brokers who seem to cost nothing, i.e. where an order is free of charge, sometimes sell your data

and you become a commodity yourself.

Fixed transaction costs are better, which are clear and, even for purchases of 1000 euros per transaction, at best only account for one or two percent of the total fees.

The cheapest broker is not always the best, good support for any questions should not be underestimated either, especially for beginners.

We have been using Captrader or Interactive Brokers for years, as most German online brokers unfortunately do not currently offer short sales.

What is your advice for newcomers and investors who only have little capital available?

Every cent that is surplus and not needed for living or for sensibly invested leisure time counts for wealth accumulation in the long term.

With an annual return of 10% over 30 years, 1,000 euros becomes almost 175,000 euros, with an annual return of 20% even 237.38 euros, and it is not completely impossible to achieve this.

Peter Lynch (Florian Homm's teacher) even managed an annual return of 29%, Omaha Warren Buffett's oracle has been able to achieve the 20% annual return for over 50 years.

The most important thing is to just start, every year counts.

In the book's foreword, you raise the question: "How do you manage your portfolio like a successful hedge fund manager and manage to make money while all other market participants are losing?" Being self-employed in the stock market is time-consuming and research-intensive.

Doesn't it make more sense to simply leave my money to an experienced fund manager and professional to manage?

Unfortunately, the reality is that 80% of active fund managers fail to beat the stock indices over the long term.

Due to the sometimes blatant fees, investors also lose out on the generated returns.

Nevertheless, there are also numerous fund managers who have been able to generate impressive returns for investors.

This “track record” is easy to see and can be found with a quick internet search.

However, make sure that the fund manager has already experienced at least one crash such as the dotcom bubble, subprime crisis or the recent corona crash, and look in particular at the maximum drawdown in this phase, i.e. how much of the capital has been lost.

It is important to have an overview of the figures and only trust investors who are really performance stars and not pure sellers

- investing is not a sympathy competition, do not trust any market criers.

Would you rather buy several stocks or rely on ETFs?

Investors who do not want to spend time on the stock market are better off in the long term with a broad ETF, for example on the MSCI World, than with individual stocks

.

Investors who are pursuing a clear strategy, for example passive income through dividend stocks, and want to spend several hours per quarter structuring their portfolios can outperform the index with individual stocks over time, or at least achieve their individual goals, such as passive income, more quickly.

Do you agree that, financially speaking, one should build on several pillars?

So not only be active on the stock market, but also buy gold, real estate, etc.?

Portfolio mix is ​​key, but it must be said that no asset class has outperformed equities since modern data collection.

Precious metals such as gold have no intrinsic value as they do not generate any returns, so we are merely speculating that they will appreciate in value.

However, due to the current inflation and money printing mania of the global central banks

, we consider precious metals to be indispensable for every portfolio

, but it should be seen more as a cash substitute.

When it comes to real estate, we are currently a bit more critical, here you should only proceed very selectively, but a positive net return is essential, otherwise an investment also becomes speculation on pure value appreciation.

Hope, however, has not lost anything on the capital market in any way.

Why should our readers buy your book?

It is important to us to provide you with a timeless basis that your children and grandchildren will be happy to take away from in order to be able to find and implement a long-term and sustainable investment strategy.

We try to convey the secrets of the rich, happy and successful people in an inspiring and practical way

.

Buy The Principles of Prosperity now

Use the right tips to defend against wealth loss and build up new wealth: The book "The Principles of Prosperity - Think and Invest Like a Billionaire" shows you how it's done!

The book The Principles of Prosperity has been available since April 19, 2022.

(€ 25.00 [D] incl. VAT) © Brandlift

This article contains affiliate links.

Source: merkur

All news articles on 2022-04-26

You may like

Life/Entertain 2024-03-13T11:44:04.392Z
Life/Entertain 2024-03-15T16:07:50.437Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.