TOP WIKIFOLIO TRADE
High market valuations: As this wikifolio just started a few weeks ago after their was a huge run into sustainable companies, renewable energy etc, I will give here a short note on how I perceive the current situation and give an outlook on how you can expect this wikifolio to be managed throughout the next months: Throughout the last months market valuations increased far beyond previous heights even though the real economy's Covid-19 recovery proceeds much slower. There is a clear hype for renewable energy, hydrogen, electric vehicles etc, which is amplified by governmental policy plans like the Green New Deal, Joe Biden's election. This made a lot of hope for many retail investors. Furthermore, many institutional investors feel pressure to reallocate assets into sustainable financial products, such as "Clean Energy" ETFs etc. When analyzing single companies behind their stocks and charts, for many of them I am doubting they can live up to the expectations that investors (or speculators) have in the moment. When speaking with non-experienced investors I heard from many of them investing significant amounts into renewable energy companies, without looking at sales growths, margins or even understanding their business models. In my opinion, governments "pumped" a lot of money into the economy (the total of M2 money in the market (EU) increased about 20% last year) - what inflates market valuations, but also increases money available for consumption. Furthermore, many inexperienced investors, persons and families don't know where to "put their money" - and invest it instead of spending. This drives up companies' valuations instead of their profits. Here we might see a rebound after lockdowns etc. are relieved and people are able to travel again, go out for dinner and parties. One valid reason for increasing stock prices is that many small companies (that might not be listed) are getting bankrupt and disappear from the market - what reduces competition and lets the big players gain market shares and give them a monopolistic (or oligopolistic) position. This can be translated into increasing profits. A second reason is that, instead of physical businesses with low margins - due to the lockdown, home office etc - people are consuming more products and services online - from software companies, which have a higher profitability. Due to their higher margins from 1€ spent a higher percentage remains as actual profit. Consequently, for these companies it's fair that their stock prices are raising. In such times of FOMO (Fear Of Missing Out) - it is crucial to understand the business model and market opportunities of each company and analysing whether it might be a potentially interesting investment. Therefore, I am slowly investing the available money into the market and am not just buying at any price. I am placing already some orders, in case valuations of the whole market or single stocks are falling - I will, step by step, invest all the available money. I am generally bullish and my mantra is "cash is trash" - in the long run you can expect this wikifolio to be mostly fully invested.