Stock picking
As stockpicking targeted Investing in individual listed companies is called. By selecting stocks according to certain criteria, an attempt is made to achieve an above-average return . Stock picking can be part of the investment strategies value investing , quality investing or growth investing .
The opposite of stock picking is investing in the overall market, for example by buying index funds or index certificates ; an alternative is to buy managed equity funds .
Selection criteria
There are numerous possible criteria by which a stock selection can be made. In value investing , for example, key figures such as the price-earnings ratio (P / E), the dividend yield or the ratio between market value and discounted cash flow can be used. The well-known investor Warren Buffett values a strong unique position and a high return on equity of the companies, while the successful fund manager Peter Lynch preferred companies with a low P / E ratio, boring company name and sparingly furnished company headquarters.
The company's industry , share-related sentiment indicators or technical chart signals can also be used.
Scientific evaluation
Stock picking contradicts the market efficiency hypothesis , which states that, adjusted for risk, no excess return can be achieved by selecting individual stocks .
A meta-study by Tweedy, Brown Company LLC came to the conclusion that by combining various criteria and contrary to the statements of some proponents of the market efficiency hypothesis, it is possible to select particularly inexpensive stocks that are likely to generate exceptional returns.
Individual evidence
- ↑ Mary Buffett, David Clark: Buffettology . Econ Taschenbuch Verlag 2000, ISBN 3-612-26736-1 .
- ↑ Peter Lynch: One step ahead of the stock market . Börsenbuch-Verlag Hoffman & Förtsch, 3rd edition from 1994.
- ↑ http://www8.gsb.columbia.edu/sites/valueinvesting/files/files/what_has_worked_all.pdf (English)