In this section, you will learn how to properly implement the Fair Value Strategy.
The Value Strategy or Value Investing is a special style of stock investing. In this form of stock investments, only shares that represent a higher real economic value than the current market price are added to the stock portfolio.
But what does that mean?
Stock companies are required to publish annual financial reports. These annual reports contain many so-called fundamental key figures on the financial status of a stock corporation. This financial data shows the financial health of a stock corporation. By properly analyzing this financial data, a value investor seeks to assume an approximate true value of the company. Above all, companies with a high profit, which is increased annually, show a high intrinsic value.
Now that the investor knows the true value of the company, he compares that value with the current market price. The market price is the current market price multiplied by the number of shares issued.
Now if a stock is worth more than it currently costs on the stock exchange, the value investor buys that stock and assumes that sooner or later the true value of the company is recognized by other market participants. On the long run stocks will get closer to their real value and undervalued stocks will perform better than expensive stocks.
This is precisely the strategy used by the Fair Value Calculator. With the help of the Fair Value Calculator, you can quickly and easily find out the true value of a stock and invest in stocks that are worth more than they cost. The Fair Value Calculator has been around since 2005 and has delivered very good returns since then. For example, benchmark indices such as DAX, Dow Jones and S&P 500 & Co. have been able to achieve a mean return of around 165% since 2005. In other words, if you had selected many stocks from these indices and invested in stocks by chance, you would have earned an average return of 165%.
With the Fair Value stocks, which were selected according to the strategy presented here, a return of around 440% was achieved, which is without question an astonishing result.
To find out for yourself which stocks are cheap and have a high fair value, you do not have to be a stock market genius. In the following video, you'll learn how to use the Premium Tools and create your own portfolio that complies with the guidelines of the Fair Value Calculator strategy.
Once you've created your portfolio, you can take the list of stocks into your real money brokerage account.
In this video you learn how to operate the premium stock screener and database. In addition you can setup you own value portfolio. Afterwards you can copy your created portfolio to your real money brokerage account.
To obtain the fair value for a stock, we have developed a formula that uses earnings per share, revenue growth, return on sales, price to book ratio and debt ratio to determine a value that is subsequently compared to the current stock price. The key figures are used in such a way that they are included in the fair value according to empirical data. Backtests, live tests and statistics of the last decades confirm the function of the Fair Value Calculator.
For the investment in the stock market using the fair value strategy, you need a starting capital of at least $ 10,000 and an investment horizon of at least 7 years. The fairvalue strategy is not for speculators or players. The strategy relies on long-term studies and scientific results that bring long term success. Moreover, this is not a get-rich-quick scheme, but a meaningful build-up of passive income.
The reason for the start-up capital and the investment horizon, ie the holding period of the shares, is the necessary diversification and the minimization of the risk. The more different stocks you own from different countries and sizes, the lower the risk. To achieve this diversification, you must buy at least 10 different stocks to be successful. Since a certain price is charged for buying the shares, buying a share below € 1,000 would incur too much additional costs. Therefore, it makes sense to implement the strategy with at least 10,000 $.
The investment period of 7 years is based on the observation that even after the biggest stock market crashes in history the loss was already set back after 7 years. It is important that you keep calm and continue to follow the fair value strategy.
"If you are looking for a quick win you are wrong here!"
With the fair value strategy, we aim for an average annual return of 15-25%. Long-term investment in fair value equities yields returns in the long term through the compound interest effect. The strategy is not suitable for short-term speculation or the use of risky equity derivatives such as leverage certificates or warrants. With the Fair Value Strategy, you buy stocks that are worth more than they actually cost, and wait patiently for years until even the masses realize that the stocks are actually worth more than those cost.
In order to create a stock portfolio in accordance with the fair value strategy, on the one hand you must use this website to find stocks that are worth more than they cost and on the other hand you have to have a real-money stock account. This page shows you which stocks you can buy, but does not invest directly in stocks. You must transfer the shares into your equity portfolio. Opening this stock portfolio is not witchcraft. You do not need anyone to help you. With the help of this website you can easily do it yourself! Stockbrokers call themselves online brokers. These are service providers who offer you an account at very favorable conditions and usually offer not only free account management but also very favorable conditions for the purchase of stock shares. Such a provider can easily be found via a Google search "Online Broker". Choose an online broker that suits you and is located in your home country. There you create an account like at every other bank. This account will have an account number to which you can transfer money from your bank account. After a few days, the money will be at your online broker and you can start buying stocks.
Now that you have opened your account, you can go online to the online broker mask and search for stocks. Each share has a mark. The WKN or ISIN is the hallmark of the stock and identifies each stock exactly. To find lucrative stocks and view their WKN or ISIN you can log in to the Portfolio Manager on this website and search for cheap stocks. In the Portfolio Manager, you can compile a list of stocks that are cheap and can see their identification numbers (WKN / ISIN).
All you have to do now is transfer the generated list to your account at the Online Broker.
You've created an online broker account, signed up on the Fair Value Calculator page and complied with the Portfolio Manager's advice. Now you should see a list of at least 10 stocks. The WKN / ISIN is visible for every share. Now you buy these 10 shares at your online broker for one-tenth of your invested capital. To do this, enter the WKN / ISIN of the share in the search there and select the share. Now you have to place an order. An order is like an order of the stock and is usually executed automatically by the online broker within minutes. You can usually choose between different order types and stock exchanges. That must not confuse you. For the order type, select "Market" and a specified stock exchange. When the order is executed you will receive an email from the online broker and the stock will be in your account. Do this with all the stocks found in Portfolio Manager in your compiled list.
When you transfer the stock list from the Portfolio Manager to your real money account with the online broker you have done everything you need to do. Should an action be necessary in your portfolio, we will contact you by email. For example, the fair value of a stock may fall and must be sold. In addition, it may also happen that a stock develops so well that a partial sale is necessary to keep your portfolio balanced. But in both cases, you would receive an email requesting action.
Disclaimers: fairvalue-calculator.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on fairvalue-calculator.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The experts may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall fairvalue-calculator.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on fairvalue-calculator.com, or relating to the use of, or inability to use, fairvalue-calculator.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. With the Use of the Portfolio Manager you don´t actually buy stocks with real money. You just get the Information of how a stock portfolio could be compiled. To follow the instructions on this side is no guarantee for success on the stock market. Stock investments are risky and can cause financial damage or lead to money losses.