What papers do the Germans put their money in? The editors asked for and analyzed the ten favorite stocks. A clear pattern can be seen. By Sven Parplies
Money and love can be a dangerous combination. Also in the financial markets.
“Never fall in love with a stock,” said legendary fund manager Peter Lynch. This is opposed by another conviction: if you want to succeed on the stock market, you have to invest for the long term, because good companies do not develop their true value in a few days or a few weeks, but over years or even decades. . A share like this inevitably grows on you. The DAX also went through a number of crises and still gained more than 8% in value on average over the year. So, under the right conditions, love and money can be a fulfilling combination.
This is how Germany invests in stocks
Even Germans, long known as stock haters, are discovering their hearts for the stock markets: according to a survey by the Deutsches Aktieninstitut, more than twelve million women and men own stocks, stock funds or AND F. This is the third highest level since the survey began in 1997. The previous peak was 12.9 million in 2001.
But on what papers do the Germans rely exactly? Online broker Comdirect gave editors an overview of the deposits. An exclusive – and of course anonymous – analysis for €uro am Sonntag shows a clear trend.
The biggest amount of money is in Apple. Shares of the iPhone maker have risen around 750% over the past ten years. The dilemma: With annual sales of $394 billion, it’s getting harder and harder to keep growing. In the fiscal year that ended in September, Californians increased their net income by just over five percent. The sum is impressive: 99.8 billion dollars remained under the line. Another figure is more important for the future: 1.8 billion devices with Apple’s operating system are active worldwide. That’s a gigantic group of customers that Apple can sell additional services to. The service activity now represents 20% of turnover. The margin of this activity, calculates Bloomberg Intelligence, is twice as high as that of the products.
The second most weighted stock is a German company with a long tradition and a special charm: Allianz, founded in 1890, is particularly popular as a dividend payer. The insurance group intends to distribute half of the annual profit to its shareholders. In addition, the dividend per share should be at least five percent higher than the previous year’s figure in the coming years. Even if these objectives do not represent a binding promise, the prospect is enticing. Allianz’s dividend yield is currently above five percent.
People also like to invest in these German stocks
The number 3 in the ranking leads a double life. Amazon is best known as the largest online retailer in the world. This activity still has strong growth potential, but fluctuates depending on the economic situation. Before the start of the Christmas business, the Management Board was cautious because the high cost of energy and inflation are curbing consumers’ desire to buy. The most important driver of the stock is Amazon’s other life: the cloud division of AWS, which provides storage and software to enterprises. Since Amazon’s business operations have been in the red so far this year, AWS is responsible for all of the group’s profits.
5% dividend yield
In total, six DAX companies are among the ten preferred values (see box below): In addition to Allianz, there are BASF, Deutsche Telekom, SAP, Siemens and the Mercedes-Benz group. They are all reliable dividend payers and currently moderately valued. Equally weighted, these six stocks in a portfolio would currently yield a dividend yield of close to 5% and that with the prospect of further increasing distributions over the long term.
The second big block of topics among the favorites is Big Tech: Alongside Apple and Amazon, Microsoft and Tesla are very popular with Germans. Dividends are not a big deal for most techs as they prefer to invest money in growth and also in stock buybacks. Apple and Microsoft are yielding at least a small dividend yield. Investors with a long-term view are betting that Big Tech will use its enormous financial power to swim atop future waves of innovation such as the Metaverse, autonomous driving or the digitalization of medicine.
This is missing in German repositories
What is missing from the Germans’ favorite depot? The top ten come exclusively from Germany and the United States. US securities are companies whose products and services are familiar to German consumers in their own daily lives. This coincides with the “home bias” phenomenon. This indicates that private investors are disproportionately investing their money in investments from their home country and thus missing out on potential returns. As it is often more difficult to assess the business development of foreign companies, equity funds are a good way to regionally diversify a portfolio.
About a quarter of an index fund (ETF) on Europe’s Stoxx Europe 600, such as that offered by iShares (WKN 263530), is invested in Britain and just over ten percent in Germany. Riskier is Vanguard FTSE Emerging Markets (WKN: A1JX51), which currently holds nearly half of the portfolio volume invested in China and India.
While the technology sector is heavily weighted among preferred stocks, other industries are absent from the top positions. In particular, the pharmaceutical industry, which can stabilize a deposit due to the relatively stable demand for drugs and medical services. Bayer is a DAX option, but the company is a conglomerate due to its large agricultural business. The alternatives are Novartis and Roche from Switzerland or Astrazeneca from Great Britain. The energy sector is only indirectly represented among the favorite stocks of the Germans as a side business of BASF and Siemens. Oil companies such as Shell from Great Britain or Totalenergies from France are also available as a supplement.
And what role do feelings play when investing? “In exuberance, one neglects the faults and weaknesses of the other, or one neglects them or one passes over them in silence. The same thing happens when you fall in love with a stock,” asset manager Gottfried Heller once described the problem. Most people will not be able to completely shut out their emotions. However, it is important not to lose your head: even a stock with strong price increases should be tested at longer intervals – for example at the beginning of the year or after the publication of quarterly results.
This article first appeared in €uro on Sunday 47/2022. Here you can get an overview of the magazine.