wikifolio trader Matthias Huber – better known as “mattmagic” on our platform – talked with us about the impossibility of finding the perfect exit point before an imminent crash. Find out more about him and his trading strategy in the current TradersTalk.
Please tell us your name.
Under what user name can you be found on wikifolio.com?
What is your profession?
I first completed a Bachelor’s and Master’s degree in Business Administration. For over two years now, I have been working in the automotive industry. I work in supply chain/logistics planning/supplier management.
How did you discover trading?
When I was 16 years old, I participated in the stock market game of Sparkasse and even finished in the top 10. That was my first contact with the stock market. At age 18, I had my own brokerage account and my interest in it and the stock market itself have accompanied me on an almost daily basis since then and have never let me go.
What does your typical trading day look like for you?
Before work, I find out about the markets in Asia, in the course of the day about the DAX and corresponding economic and corporate results, and in the evening, I follow the stock exchange in New York. At the end of the workday, I often follow Bloomberg and Telebörse and on weekends I also like to read business magazines such as the Handelsblatt or the economic and financial pages of the FAZ/SZ.
How many wikifolios do you currently manage? Are you already a “Real Money” trader?
I currently run four wikifolios. Two of them have the status “investable”, two more have already achieved the status as well and will soon also be “investable”. I currently consider a fifth wikifolio which will exclusively trade leverage products. Since I believe in my wikifolios and want to benefit from them myself, I am a so-called Real Money Trader, having invested in them myself.
What are your reasons for publishing your trading strategy as a wikifolio?
I can try out new trading strategies and benefit from new insights and findings from other users. I also find it incredibly exciting to manage one’s own wikifolio.
How would you roughly outline your trading style (on wikifolio.com)?
I primarily invest in Blue Chips. I thoroughly analyze the companies in advance. I rely on medium to long-term investments and do not let short-term fluctuations unnerve me. I try to spread the risk as widely as possible through broad diversification (currently, the maximum wikifolio portion is 2%). If I expect a correction in the markets, I also rely on falling prices in the short term. Since I am aiming at a long-term value growth and often hold stocks in the wikifolio for months, daily brokerage account restructurings are rather rare.
Are you satisfied with the development of your wikifolios?
So far, I am very satisfied with my “Huber Long Term Value Growth” wikifolio. In recent years, I was able to generate a continuous value growth and have thus been able to almost double the value of my wikifolio. I can also be very satisfied with a Sharpe ratio of about 3.5 with a run time of almost three years and a max. loss of approximately 15% so far. Of course, I want to continue the positive development. However, I am not satisfied with my second wikifolio “Matthias G. Huber Up/Down Return”. During the first 1.5 years, this wikifolio served as a hedge against falling prices. I have been actively managing this wikifolio for 1.5 years again and am also satisfied with its price development since then. Of course I cannot be satisfied with an overall performance of about –45 percent, but the focus was always on my other wikifolio.
What was your trading highlight of the past 360 days?
My trading highlight was that I participated in both rising and falling prices during the past 360 days and recognized the correction in time and was thus able to restructure my wikifolio correspondingly at an early stage. I was thus able to achieve very high returns and a corresponding outperformance.
How do you assess the stock market year 2015?
Between January and May 2015, the DAX rose to almost 12,500 points and thus ignored almost all negative news such as the Greek crisis. A sideways shift followed until August and problems such as a first interest rate hike by the Fed, the China crisis, worse corporate results and outlooks moved to the fore. An overdue correction followed in August and September. Since the stock markets in China was able to stabilize again and interest rates were still very low and investment alternatives did not exist yet, the stock exchange rose to nearly 11,000 points by early November. I still see rising prices until the end of the year, although I do not expect any further very large movements. With the correct strategy, I can see an exciting and highly promising stock exchange year 2016 ahead of us.
Which markets are currently the most fun / make the most sense?
Currently, I like the markets in Germany and Switzerland. At the moment, I prefer Blue Chips and am rather reluctant as far as small caps are concerned, also due to the already high valuation. In the US, some individual securities remain interesting. But in general, the markets in the US are no longer inexpensive and there is even a possibility of a recession in the US next year. Therefore I would hold the US in an underweight position compared to Germany. Emerging markets such as China or Brazil are still too unsafe in my opinion and I would wait and see.
Which stocks or securities do you currently favor in the medium term?
In the medium term, I would favor stocks / securities in the areas of consumer goods, food, pharmaceuticals, health and aerospace
What was the hardest lesson you had to learn on the market?
That while a stock market crash may very often announce itself in advance, the precise date cannot, however, be predicted down to the month and day, and it is impossible to find the perfect exit. Another lesson learned is not to select too high levers with knock-out products.
What advice would you give to a novice beginner?
I would tell them:
- At first, rely on a broad portfolio with Blue Chip stocks
- Do not give up after the first setbacks and losses
- Remain calm and do not check profits every day
- Only use leverage products after many years of stock market experience
- Learn from your mistakes and realize losses early on.
Which book can you recommend to other traders?
For a better understanding of the stock market, I recommend André Kostolany “Die Kunst über Geld nachzudenken” (Engl. “The art of thinking about money”) and the book by Friedhelm Busch / “Greife nie in ein fallendes Messer” (Engl. “Never catch a falling knife”). Furthermore and for entertainment, I recommend the books by Florian Homm “Kopf Geld Jagd” (Engl. "Bounty Hunting") and James Cramer “Confessions of a Street Addict”.