Finance

“The German was brought up to save”

What should investors watch out for in 2021? Which trends will play a role in the stock market next year? And how can private investors benefit from it? Stock exchange expert Röhl provides the answers.

The year 2020 was a special one for the stock exchange in many ways: In spring, share prices collapsed after an all-time high of the Dax in February due to the Corona crisis. In the summer, the German financial services provider Wirecard became the first listed company to file for bankruptcy in the German benchmark index. The share sank to below one euro, billions in market value burned.

For Christian W. Röhl, equity expert and bestselling author (Twitter account), that’s not a problem. He still advises investors to invest in the stock market. In an interview with t-online, he explains where the Germans get their share fear from and reveals which titles he has in focus for the coming year 2021.

t-online: Mr. Röhl, how much money did you lose with Wirecard shares this year?

Christian W. Röhl: None at all. Wirecard was never an issue for me. The share never fit into my loot scheme. I’ve only ever invested in what I know and what I use myself, for example in Visa or PayPal. I never understood what was so special about Wirecard.

Then what was your bad individual investment in the past calendar year?

That must have been the share of Deutsche Euroshop, which is one of the most important owners of shopping centers in Germany. It has recovered in the meantime, but is still more than 30 percent behind over the year and is down third from its all-time high. This is due on the one hand to structural issues – keyword online trading – and on the other hand, of course, to the Corona crisis.

How much does that annoy you?

Not at all. That’s just part of it. I rarely look at individual stocks. I make sure that my investments work as a whole, that my portfolio develops positively.

With an investment in shares you are part of a minority in Germany. Only 16 percent hold stocks. Why is that?

The German has always been risk averse. He was raised to save. That worked well for a long time. It was not until the 1990s that attempts were made with the so-called people’s shares, in which millions of Germans first went public.

Do you mean Telekom?

I agree. The trouble is, this story went terribly wrong. A lot of investor money went down the drain. Back then, two generations were spoiled for the stock market: The parents’ generation who lost their money. And the generation of children whose parents have instilled a fear of the stock market.

Had it turned out differently, it would have T share not given?

Definitely. At least there would have been a chance to turn a wave of speculation into an investment culture. But the state was not interested in that at the time. Rather, he wanted to sell the Telekom share at the maximum price in the third IPO in 2000 in order to flush money into the state treasury. With the T share the state has done great damage. That is still deep in people 20 years later.

The stock expert
Christian W. Röhl is a German investor and bestselling author. He lectures on investing in stocks and is an advocate of an equity strategy that relies on dividends. In 2016 he published his book “Stay cool and collect dividends”.

What should the state do to promote the equity culture in Germany?

First of all, he should save himself the planned financial transaction tax. It only represents an unnecessary hurdle for small investors. Then the federal government could introduce a tax-privileged deposit based on the US model 401k, which the tax authorities do not have access to as long as investors do not withdraw their money before retirement. Another idea would be to revive the speculation period so that price gains would be tax-free after a certain holding period. That can be longer than the twelve months we had up to 2008. This rewards all those who invest long-term and don’t gamble.

Many people also consider classic stick-picking to be gambling. What do you say to these people?

You know, I don’t see this conflict between individual stocks and funds at all. Ultimately, both are about stocks. Whether I buy individual shares, an ETF or a classic fund, is initially a question of wealth and investment style: Do I want to own 30 shares myself? Or is it enough for me if I have these securities combined in one fund? But other things are much more relevant – for example the investment period. It is also crucial whether I have a rule-based strategy or simply buy from my gut.

Good keyword: You are promoting a dividend strategy, among other things …

No! I am not promoting anything at all.

Oh no? You wrote a whole book about dividends – even your homepage is called “Dividendenadel”.

I’m an absolute fan of stocks and, of course, of Dividends. Because regardless of the ups and downs on the stock market, they are the direct return on the share: If the company works, I get money as an investor. In addition, my experience has shown that dividend quality is a good indicator for identifying promising stocks over the long term. But these are all subordinate details. Much more important is the fundamental decision in favor of stocks as an indispensable component of the portfolio – which can then be implemented with different strategies.

More like an index fund, an ETF?

Yes exactly. That’s enough for now. The old stock market adage applies: Broadly diversified, never regretted. Once you have started with an ETF on the MSCI World or the FTSE All World, you can continue from there and develop your own portfolio in one direction or the other. For example, by placing more emphasis on Asia with funds or by buying individual stocks as part of a clearly defined strategy.

In short: first basic investment with a broadly diversified ETF, then buy individual shares?

Correct. As soon as the foundation is in place, you can realize a little bit yourself in your depot. It’s like with food: I don’t just eat fast food menus, I also like to cook myself from time to time. Instead of only using the pre-chewed stock mix of an ETF to invest, you can gradually give the portfolio individuality. Mind you, you can, not have to. And as with cooking, please follow a recipe, i.e. rules. Not from the gut.

Does all this also apply in old age, for retirees?

This cannot be said in general terms, in individual cases the answer depends on several factors. It depends, for example, on the regular income from pensions, but also on whether someone owns a property or not. Basically, however, if you want to get your money in old age – after taxes and inflation – you can hardly ignore shares as one of several pillars of investment. That’s why my mother also owns shares.

Let’s look to the coming year. If you were allowed to buy just one share in 2021 and had to choose between Lufthansa, Tesla and Biontech – which one would you choose?

Oh God, does it have to be these three of all people?

You’re welcome.

Alright Under the exclusion principle, I would probably choose Tesla.

Why?

Biontech is a great story and certainly a style-setting stock for 2020. And yet I wouldn’t buy it – because I can’t even pronounce the process of vaccine development accident-free. I don’t understand enough about the biotechnology segment, so I’m staying out of it. I see Lufthansa very critically. Even if we defeat the pandemic with a vaccine in the coming year, it will not be as many business trips that Lufthansa has made a living on until now. So all that remains is Tesla.

But isn’t Tesla stock far too expensive right now?

Sure, the rating is very high. But I have confidence that Elon Musk will be good for some kind of surprise next year that will give the Tesla course another boost.

So are you a Musk fan too?

I think he’s cool, yeah. Sure, with him genius and madness are sometimes close together. And no, not every snotty kid will one day become an Elon Musk. In the end, however, it is visionaries like him who set change and progress in motion. In addition, it is generally good that people like Musk make entrepreneurship a topic for the general public.

Back to the annual outlook: What trends do you see for 2021?

Basically, there are three topics that I still consider highly interesting, well beyond 2021: First, digitization, which is being accelerated by the Corona crisis. Second, Corona shows us how important the topic of health is for a society. Health innovations, also apart from active ingredients, are therefore becoming even more important – for example medical technology and everything that has to do with preventive care. Third: the Asian economic area. To paraphrase the billionaire Ray Dalio: The risk of not being invested in Asia is much greater than the risk of investing there.

And which securities do you associate with these three trends?

In principle, these three topics can of course be approached wonderfully with funds and ETFs. If you wanted to break it down into individual stocks, I have to say in advance: It always depends on the entire portfolio. Nobody should just buy three stocks that someone is trumpeting – especially not if I should be.

Understood. But what would it be?

The topic of health can be tackled well with a Danaher share. This is a holding company that makes two thirds of its sales in the medical technology sector. An alternative to that would be Johnson & Johnson stock, if you want to go big. In the field of digitization, I still think Microsoft is a good idea because the company is part of every software trend – and also pays dividends. And in Asia, I think Tencent is very interesting, even if I’m not a gamer myself.

Two of the three are tech companies. So you don’t believe that so-called value stocks such as automotive stocks will be in greater demand again after Corona?

Counter question: Do you think that technology will be done with the end of the pandemic? The opposite is the case: digitization will play an even greater role in the future. And companies that resist technological progress are disrupted. In every industry.

You didn’t mention the topic of sustainability at all. What about it?

That will of course continue to accompany us. I don’t think it’s a market phenomenon, but rather a meta trend. Sustainability issues affect all topics and developments. And the legislature will ensure that sustainability will have an ever greater influence on investment decisions – both privately and institutionally. Companies that do not meet certain sustainability criteria will at some point have refinancing problems.

Mr. Röhl, thank you for talking to us.

Note: The t-online.de portal is an independent news portal and is operated by Ströer Digital Publishing GmbH.

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