An investment strategy must follow clear rules or principles. At Flossbach von Storch, there are five principles guiding all our investment decisions. Our ultimate goal is to protect the assets entrusted to us - no matter what the amount.
“Diversification” is the most important of the five principles. Investors who want to protect and increase their assets over the long term have no choice but to rationally allocate their assets to various asset classes, securities and currencies. This reduces an investor's exposure to risk.
For us, flexibility in investing does not mean short-term, potentially hectic trading on the capital markets. We understand flexibility to be the maximum freedom to manoeuvre when developing investment ideas: If a company’s stock is too expensive, its bonds may be more suitable. Only those who invest across asset classes can successfully manage portfolios in the long term.
“Quality” is also important for an investment. Particularly in times of great uncertainty, investors should consider the substance of an investment, the long-term returns generated by the investment and, above all, the predictability of those returns. Betting on short-term popular trends, on the other hand, offers little promise of success.
Excessive debt is the most frequent cause of corporate, government and, last but not least, personal bankruptcy. Investors should therefore always consider their own “solvency”, as well as the solvency of the issuers of the shares and bonds they buy. In addition to ratings from rating agencies, investors should also prepare their own creditworthiness ratings.
Warren Buffet once said that price is what you pay, value is what you get. Higher valuations are justified for the shares of high quality companies than those of average companies. Therefore, we only have investments in the portfolio, which meet our quality requirements – if the price is appropriate to the value of the investment.