This wikifolio is focused on the investment in stocks, particularly in shares of companies in special situations. By way of example, special situations may include situations where a company’s profits are expected to produce a positive turnaround; companies that may become takeover targets; or companies whose profits are expected to exhibit strong growth over the coming years. Fundamental analysis is key to the selection of investments. Important criteria would include the perceived quality of management; growth of market and relative market position of the company; strength of the balance sheet (gearing ratio, net debt/cash position), and parameters like the price earning ratio and the dividend yield. Technical (chart) analysis is planned to get used to enhance the timing of the investment decisions (e.g. trend channels, MACD and relative strength indicators). Information sources used as input into the selection would include various publications including annual reports and financial statements published by companies; stock market letters; and daily publications. In the absence of exceptional circumstances, the portfolio is planned to hold no less than 10 different investments at any point in time in order to benefit from risk diversification; but usually also not more than 30.
The holding period may be longer than one year for the minority of investments but is expected to usually range from one to several months. In exceptional cases stocks may also get sold already after a few days (e.g. when stop loss orders kick in, or when exceptional profits have been made right after investing into a stock).