In the last chapters we looked at how markets keep overreacting, how time is an ally and how investing without fair value is a bit like driving in thick fog. The next logical question is this. In a market full of hype and fantasy valuations, how do you find the companies where price and value truly diverge in your favour. That is exactly why I built the Fairvalue database and the Premium Tools.

There is one sentence that keeps appearing in many evaluations. The best time to start investing is always now. Not because the market is guaranteed to be cheap at this very moment, but because nobody can reliably predict when and why the next crisis will hit. Market timing looks perfect on paper and fails almost every time in real life. I did not want to depend on a gut feeling. I wanted a system. The database and the Premium Tools are designed so that you can still find real opportunities even in overheated phases.

The database holds data for tens of thousands of stocks, including the key figures needed for a solid analysis. With the stock screener you can, for example, display all companies whose calculated fair value is above the current market price. These stocks end up on a kind of hotlist, a list of potentially undervalued shares. In this way you can still find individual opportunities even in times when the big indices are marching from one high to the next, as long as there is a meaningful gap between price and value that works in your favour.

In practice two mistakes occur especially often. The first sounds trivial but can have huge consequences. The wrong currency. For many US stocks the earnings per share, the EPS, are listed in US dollars in financial databases. The share price in your own portfolio or on a European website, however, may be quoted in euros. If you enter the EPS in dollars into the calculator, get a fair value in dollars and later compare that fair value with a share price in euros, you quietly build in an exchange rate error. Fair value is always shown in the currency in which you entered the EPS. If you want to think and calculate in euros, you should convert the EPS into euros first and only then calculate fair value. This is the only way to compare fair value and current price cleanly. In the Premium Tools, fair value is displayed according to the trading venue and its currency. You just have to make sure you are not comparing apples with oranges.

The second mistake is to use only half of what the tools offer. On the same page as the simple calculator you will find extended calculators that ask for several key figures and give a noticeably more precise result in return. They look more technical at first glance, but they get you closer to the intrinsic value of a company than any spontaneous opinion. For each metric there are explanations and hints explaining what it means and how to read it. The goal is not to turn everybody into a full time analyst. The goal is to get a more stable picture with a few extra inputs than any glossy brochure could ever provide. It is worth spending a little time clicking through the calculators and ratios on the website.

Once you feel comfortable with the screener and the hotlist in the Premium Tools, it makes sense to build your own list of interesting stocks. On that list you can collect names that the screener suggests, stocks you already own, companies from articles, conversations or discussions – in short, anything that keeps popping up. Many investors start their search with financial magazines, online portals and stock forums. That is not inherently bad, but you should be aware of what you are looking at. Rankings and “top stock” lists often show the current favourites of the moment, which are usually stocks that have already risen strongly or that are making noise through big swings. These lists are more a mirror of what is currently in the spotlight than a list of quiet, undervalued opportunities. Late in a long bull market they rarely contain the sleeping bargains, but mostly the loudest stories. In the Fairvalue Calculator we offer a portfolio function that lets you maintain exactly this kind of personal stock list.

A second source, which is often underestimated, lies in your own daily life. Which products do you use constantly and with genuine satisfaction. Which providers leave a consistently positive impression. Are there brands your partner is excited about or that your children love. Which apps, devices or services would many people recommend without thinking twice. The key question is then whether this is just a personal preference or something that a lot of people feel in a similar way. When many people see a product as indispensable, demand rises and in many cases the value of the company does as well over time. Despite that, we rarely make the simple connection that these observations might be interesting from an investor’s perspective. We experience the purchase, but we forget the investor’s view.

One example from my own life makes this very clear. My father likes to read the Austrian newspaper “Die Presse” in the morning. One day, around Christmas 2007, he came across a small box at the edge of a page. It mentioned that the discounter Penny Markt would offer Apple’s iPhone in small quantities for the Christmas business, bringing it to Austria for the first time. Penny Markt, a rather unglamorous grocery store, suddenly had a device in its assortment that only a few tech enthusiasts really knew at the time. There were no stylish Apple stores in every city centre yet. The iPhone was still a niche topic.

None of us would have seriously thought at that moment that Apple, with this one product, would bring then market leader Nokia to its knees and reshape an entire industry. Perhaps the article mentioned that it was a completely different kind of phone with touch control and an unfamiliar interface. With a bit of imagination you could have seen that something special was happening. If we had already had the habit of connecting signals in everyday life with the stock market, we might have asked ourselves whether Apple was not worth a closer look as a stock. You have to train yourself to see these signals.

What did we do instead. Some time later we actually went to that Penny Markt and bought two first generation iPhones. For that time it felt almost crazy, because our old phones seemed perfectly fine. But the moment we held the iPhone in our hands it was obvious that this device was in a completely different league. The feel, the glass, the interface, the overall experience was one level more modern than anything we had seen before. We were thrilled by the product, but we did not link that excitement to the idea that millions of people might feel the same and that this might represent a huge opportunity as a stock. We were buyers, not investors, in that moment.

I am not telling this story to sound smart in hindsight, but to show how close daily life and investment opportunities really are. We constantly walk past signals that could point to strong businesses. The real art is to notice them and then connect them with a systematic analysis. This is exactly where the database, the screener, the hotlists and the extended calculators come into play. They do not replace the real world view of products and services. They simply help turn a good feeling into a verifiable valuation.

When you combine the Premium Tools with impressions from your own everyday life, you end up with a very powerful foundation. You find companies you know and experience, then you check them calmly with the Fairvalue Calculator, and the numbers decide whether the gap between price and value is large enough to justify the risk and an investment. That is the point at which long term, self directed investing begins in the way I understand it.