If you only believe in momentum to a limited extent and are absolutely convinced of mean reversion, when should you set up savings plans on individual stocks?
Already at a plus of 3% or only at 5% or more?
What do the wise among you say?
I know your DCA thesis, but I'll tell you what you already know: It will go down again.
I'd rather suspend the savings plans, build up cash again and wait until it crashes again, when I can make individual purchases or set up savings plans again.
In addition to mean reversion, there is also the random walk. Nobody knows whether mean reversion will come today, tomorrow or in 5 years' time. It could be even worse. If you make consistently poor returns over the next 5 years, you will also have mean reversion and still miss out on returns. Or even more extreme: the market continues to make average returns on average and the current overvaluation becomes the new benchmark. Do I believe that? Nope. Could it happen? Definitely. But I don't want to take the risk of not finding the right entry point for several years.
Today Iâm sharing with you my main portfolio. This doesnât include any ETF investments and crypto currencies / gold etc. since I want to focus my presence on getquin on stock-picking.
Read my 3-part portfolio strategy posts to get the full picture - here are just the main pillars of what Iâm doing:
Long-term buy and hold (average holding time 5+ years at least)
Focus on high-ROIC compounders riding secular trends (top-tier capital efficiency)
High margins, strong FCF growth, large moats (7 powers strategy)
Holding not more than 20 stocks at a time while mainly focusing on US and EU based companies
I like to divide my holdings into âcore holdingsâ (forever stocks) and âtrend picksâ (2030 stocks) as follows:
I use the 7 Powers framework from the book â7 Powers: The Foundations of Business Strategyâ by Hamilton Helmer. Itâs a killer framework for understanding why some businesses create lasting value and compound returns over time.
Each âPowerâ is a sustainable strategic advantage that lets a company generate outsized returns for a long time. I ask the 7 questions for each stock I am considering to buy.
1. Counter-Positioning
What it is: A new entrant adopts a superior business model that incumbents canât copy without damaging their own biz.
Example: Netflix vs. Blockbuster. Blockbuster couldnât move to streaming without killing its DVD revenue.
Why it matters: Creates asymmetric pressure; the old guard is paralyzed.
Before anyone thinks I'm always right, here's an example of how that's not the case. But since someone asked me yesterday to post something negative, I'm happy to do so. First and foremost, however, I do this to explain my trading strategies a little more. So if a value like the one below $MC (-1.92%) does not develop in the right direction that I expect right from the start, I get out at around -20% at the latest. I don't buy more and hope for improvement. My thought when I entered the trade was a short-term positive development due to the tariff reduction. It didn't work out and I can live with that.
Until recently, close business relations with China were considered a blemish - investors punished such shares with discounts. But now the narrative has changed abruptly: Following the agreement in the trade dispute with the USA, China is suddenly being seen as an opportunity again.
"Welt" has analyzed data from the US investment bank Goldman Sachs analyzed. Goldman has compiled several indices that are heavily influenced by the China issue and which show how much of a discount the values still have.
Some European tech stocks with high China business are also identified as potential winners.
