Rick Lover


When investing money, there is no path to securities, such as B. Shares over. This is not only due to the low interest rates, but also to the fact that these have made the former investment classics such as savings accounts or life insurance unprofitable. However, if you want to become a shareholder, you have to do your research and consider possible losses. Here, you will understand all the basics of buying stocks, where to buy stocks, and step-by-step instructions on how to buy stocks. Anyone who wants to buy securities does not need great expert knowledge. With some basic knowledge, you can get started buying stocks and devising a stock strategy. Still, a basic knowledge of securities trading is essential before learning about where to buy stocks. This is the only way to weigh up the risk and possible losses.

With stocks, you benefit from corporate profits

Remember that anyone who wants to buy or sell a stock has to pay an order fee. The costs often consist of a fixed basic fee per order as well as a certain percentage of the order total. However, there is no uniform regulation for fees; models such as a fixed order fee are also possible. With one share you buy a stake in a company. When a company goes public, the value of a company is divided into shares, which are then sold to shareholders as securities. As a shareholder, you are effectively a co-owner of a company – you own shares in it. If the company generates a profit, part of this is usually distributed as a dividend to the shareholders on a pro rata basis for each share certificate.

The annual general meeting of the company decides on the amount of the dividend. If you are the owner of a so-called common share, you as a shareholder have voting rights at this meeting. If you own a preference share, you have no voting rights. In return, many companies pay preferred stock holders a slightly higher dividend. A number of public companies issue both preferred and common stocks. So that there is no mix-up when ordering, each share has a unique identification number. Under this it is traded on all stock exchanges.

The value of a share is constantly re-determined in the course of a trading day through the interaction of supply and demand. Investors speculate on the future development of the stock exchange price and the company’s profit prospects. The prices of shares therefore not only reflect an objectively determined value of a company, but also the expectation of future development. In addition to company data, the psychology of market participants and general economic development also play an important role. Observe the price development closely and find out about stock analyzes and stock recommendations as well as possible risks in order to get an overview of the stock market and the individual prices.

Where can you buy stocks?


To be able to order shares, you have to open a deposit. In the past, the securities account was the place – for example in a bank – where shareholders actually stored their actual shares. Nowadays, the shares are kept electronically, so you can buy any share easily online. Your custody account is the switching point through which you can quickly and clearly view your shares with your broker. When you open a deposit for the shares, you automatically get a so-called clearing account. Your share purchases are settled through this account. All dividends or other income from securities trading are initially credited to this account. When opening a deposit, you enter a reference account – for example your current account – to which all amounts will be transferred from the clearing account.


In order to be able to buy a share, investors need a so-called broker in addition to the deposit, who handles the transaction on a stock exchange. When it comes to such a transaction, i.e. buying or selling a security, experts speak of an order. The term comes from the English and means something like “order” or “order”. In the past, the classic branch bank was often used as a broker, where shareholders could place their securities orders. Today direct brokers like comdirect are a convenient alternative.


The big advantage of buying shares online is obvious: online access to your share portfolio via PC, tablet or smartphone simplifies the ordering process considerably. In addition, as a broker, comdirect provides you with many intelligent tools and information that will help you buy shares online. After opening a portfolio, buying and selling, i.e. placing buy or sell orders, is very easy and clear online. At comdirect, you use the order book for this. This is a tool which you can view and manage your orders centrally.


Next, you determine how your order will be carried out using the order type. With a cheapest order, your broker executes the order as soon as stocks are available to buy. Optionally, you can also specify a “limit” with which you set an upper price limit up to which you want to buy the shares. The order then runs as long as you have set the validity. In addition, there are other order types with which you can control the buying and selling of your shares very precisely. The so-called “stop-loss order”, with which you can automatically secure your share portfolio, is interesting for beginners. You specify a limit value below which – should the price fall – the share is automatically sold.

However, this is offset by risks that you should also consider. Amongst other things:

Company risk: By buying stocks, you are also assuming part of the risk of a company. In extreme cases, a company can go bankrupt, which can lead to the loss of the capital invested.

Price risk: The stock price can change at any time due to the interplay between supply and demand. The price of a company is determined both by the general market situation and by the business situation of the company itself. Both are a risk and can lead to price losses.

Dividend risk: The payment of dividends cannot be guaranteed.

Psychology of the market: The trading of securities on the stock exchange is also influenced by a psychological component.

Yes, because in this way your money works twice for you: On the one hand, a dividend is paid out for many shares, which is due on every share certificate. On the other hand, by buying shares, you have the opportunity to participate directly in the increase in the value of a company on the stock exchange through price gains . This form of investment can therefore enable high returns. However, stocks are also subject to risks, such as market fluctuations, which can affect returns. Losses up to a total loss are therefore possible. Funds are financial instruments that are mostly made up of stocks and bonds. The value of a fund grows with the individual values ​​it contains and passes the profits on to investors. In this way, you can draw the growth in value of your investment from real economic developments, just like stocks. The advantage: Since funds are made up of various individual values, your investment is always diversified, i.e. spread over several securities. However, like stocks, funds can fluctuate in value and result in losses.

What do we understand by megatrends?

A trend is a long-term, often fluctuating change in a characteristic in the same direction. In stock market trading trends play a major role. Here they stand for long-term price movements up or down. Accordingly, one finds upward or downward trends in the courses.

So what is the megatrend definition? A megatrend is a fundamental and sustainable trend that is associated with profound structural change and that tooks over long periods of time – often decades.

CASE IN POINT: globalization and international division of labor. The word part “mega” comes from ancient Greek and means something like “very large”. Megatrends like globalization have an impact in many areas of business, politics and society, not just on the stock market. They are global and “overarching” in the truest sense of the word. The stock exchange prices are only an expression of change and reflect the expectations of the future associated with long-term changes. There are investment strategies that specifically aim to profit from megatrends.

How do you find megatrends?

Trends in market prices are relatively easy to determine. As part of the so-called technical analysis , sophisticated mathematical-statistical procedures have been developed to measure trends and identify trend reversals at an early stage. Pure chart technicians do not even ask about the causes of the trend; trend identification is sufficient for them. But this is a very risky strategy that hides important information. That doesn’t work when identifying megatrends. They not only require intensive observation and analysis of current and past developments in a wide variety of areas, but also corresponding future projections.

GLOBAL megatrends – three examples

A wide range of results can also be obtained when searching for the keyword “megatrends” on the Internet. The megatrend definition on the internet is inconsistent. The following is an overview of global megatrends without claiming to be exhaustive and combined with a systematization. A clear demarcation is not possible. Social megatrends, for example, also have economic effects and influence politics. However, there can also be interactions between technological and economic megatrends. Everything is related to everything – that is precisely the hallmark of megatrends.

Global megatrends in four important areas

In the following, three megatrends from this megatrend universe are examined in more detail.

  • Megatrends: sustainability
  • Megatrends: Big Data
  • Megatrends: Health and Demographic Change


Megatrends affect the entire economy and society – they have a global impact on all markets. But that does not mean that change is taking place in the same way everywhere. There are booming industries, markets and sectors that benefit particularly from megatrends, while others are left behind. Changes also take place at different speeds. Some areas are pioneers in change, others laggards.

Investing in global megatrends means investing your money specifically in areas that are likely to be among the likely mega-trend winners. The expectation is that such areas will grow faster than average and be successful. This should then be reflected accordingly in price developments and income distributions. Expected megatrend losers, on the other hand, are avoided. In principle, it is an active investment strategy that aims to achieve excess returns. The concept sounds logical and promising. Nevertheless, there are pros and cons. Whether a megatrend strategy really leads to success is controversial among experts.


  • Companies in booming industries and future markets are growing particularly quickly. Megatrend stocks therefore offer above-average price potential.          
  • Megatrend business models promise above-average profits. This is also reflected in distributions and prices.
  • Investments in “outdated” business models that miss the “train of the day” are automatically avoided. The risk of underperformance decreases.


  • With megatrends, there is considerable forecast uncertainty. Whether a megatrend really keeps its promises can only be seen over time.
  • Expectations of above-average developments are often already priced into the courses, and over-performance is then no longer possible.
  • When you focus on specific industries and markets, the benefits of risk diversification are lost. Rather, specific industry and market risks are taken.

What should be considered in megatrends investments?

There are different ways to invest in megatrends in the stock market. It’s primarily about stocks, funds, and ETFs. One option is to specifically buy megatrend stocks – these are stocks in companies that are active in booming industries and future markets or that pursue business models that rely on megatrends.

If you limit yourself to the stocks of certain companies when investing in megatrends, you also buy the respective specific company risk. A megatrend can be very promising, but that does not automatically mean that a business model linked to it works. A diversified portfolio should also be ensured with megatrends stocks. A wide diversification is possible, for example, through megatrends ETFs. In such an ETF, megatrends are mapped via the index construction. Either an existing index is “adjusted” for values ​​that do not match the respective megatrend. Or new indices are constructed that are tailored to the respective megatrend. Anyone looking for an ETF related to megatrends will easily find it. There is now a wide range.

The advantage here: ETFs enable megatrends portfolios that easily map different booming industries and future markets.

ETF: Megatrends indices – here are some examples of areas with ETF offers:

  • Digitization and information technology
  • Cyber ​​security
  • Renewable energy
  • Sustainability
  • Clean water and supplies
  • Global infrastructure
  • Health & Wellness

IMPORTANT TO KNOW: Every ETF provider determines which index construct he bases his fund on. Indices can also differ significantly within a megatrend. Two ETFs on the health & wellness megatrends can refer to very different health indices and then perform differently. You should therefore always check what is actually behind a megatrend index. In contrast to conventional ETFs, an ETF on megatrends pursues an active goal – through targeted selection within the framework of the megatrend it should perform better than the market average. This requires a correspondingly more complex management, which is also reflected in the costs of the ETF. They are higher than with “normal” ETFs . The calculation with the megatrends can work, but it doesn’t have to. In any case, staying power is advisable for megatrend investments. Megatrends have a long-term effect, and this may also apply to investment success.

What is the tracking difference – and what is the tracking error?

The key figure indicates the extent to which the performance of an ETF deviates from the respective reference index in a period under consideration. This is particularly important for ETFs, because they have declared that they want to replicate an index as precisely as possible. The tracking difference shows whether and to what extent the ETF is achieving this goal, even overachieving it or staying below its target. The term tracking error is often used alongside the tracking difference. Sometimes it is used synonymously for tracking difference, sometimes it refers to the measured standard deviation. The tracking difference then indicates the (average) deviation in the performance of the fund and the index, while the tracking error describes their fluctuation over time. That is a subtle difference.


The simple formula is: Tracking Difference = benchmark index performance – ETF performance

EXAMPLE : On an annual basis, the return is the yardstick for calculating the performance of funds. If an ETF achieves an annual return of 7.5% and the relevant reference index achieves a performance of 8%, the tracking difference is 0.5%. If the ETF develops exactly like the reference index, the tracking difference is 0.

GOOD TO KNOW: Sometimes the order is reversed when calculating: Tracking Difference = ETF performance – Reference index performance. This is then associated with a change in sign. It is advisable to always check the underlying definition when specifying key figures in order to avoid misinterpretations.

How can the tracking difference be explained?

Why can there be deviations in performance at all when the ETF portfolio is a reflection of the respective reference index? Shouldn’t one always expect a tracking difference of 0?

The answer is: yes – in a world without transaction costs, without fees, with immediate reinvestment of all returns at any time and immediate follow-up of index adjustments. The reality is a little different. ETF fees are a major cause of tracking difference. Even if ETFs are very cheap – the annual management fee has a negative impact on ETF performance compared to index performance.

In addition, other influencing factors can influence the replication accuracy:

Transaction costs: Necessary portfolio shifts due to changes in the index cause additional transaction costs.

Dividends: Can cause deviations due to delays in reinvestment, sometimes also due to different tax considerations in the index than in the fund assets.

Liquidity: With the provision of liquidity, the liquid assets generate no or only very little income, but there are also no losses.

Securities lending: Additional income can be achieved by lending securities from the fund’s assets. Securities lending improves ETF returns compared to index performance.

What is the significance of the tracking difference?

The tracking difference is not static, even if the ETF fees as the main influencing factor are usually a strong constant. But other factors that are also relevant change over time. Transaction costs depend on the frequency and extent of reallocations, dividends vary, the conditions for securities lending are exposed to market influences, etc. The variability of the tracking difference is measured – as mentioned above – via the tracking error.

In principle, the tracking difference is always a so-called ex-post consideration. That means: the deviation can only be determined afterwards. An estimate for the future can be derived from this, but it is fraught with uncertainty. It is greater the more variable factors influence the tracking difference.

Positive / negative tracking difference – what does that mean?

If we start from the definition: Tracking Difference = performance of reference index – performance of ETF, then a value with a positive sign always means that the performance of the ETF has remained below the index performance by the relevant percentage. The higher the amount, the greater the deviation. A negative sign indicates that the ETF has outperformed its benchmark index. This does happen and is possible if the yields outside of the pure index replication more than offset the costs incurred. Another reason may be deviations in the index replication, which lead to the index fund “outperforming” its reference index. These statements also apply if the tracking difference is defined “the other way round”, then again with the opposite sign.

ETF construction and tracking difference

The type of ETF construction can also have an impact on the tracking difference. As a rule, the index replication of synthetically replicated ETFs is particularly precise. The tracking difference is then largely cost-related and relatively stable.

In the case of physically replicated ETFs, on the other hand, there may be more deviations. These tend to be higher for distributing funds than for accumulating funds. The reason: in the case of distributing funds, larger amounts must be held as liquidity for distribution purposes.

The tracking difference is built in almost automatically when sampling index funds. Sampling is a variation on physical replication. An index is not reproduced 1: 1, but – mostly for cost reasons – you limit yourself to a representative selection. Of course, this increases the likelihood of deviations – up or down.

The market for ETFs or exchange-traded index funds is growing. These passively managed investment instruments are particularly interesting for private investors who are looking for a simple, transparent and convenient investment opportunity. In this article, we explain what ETFs are and how they work. In addition to a general definition of ETFs, we deal with the different types of index funds and the advantages and disadvantages of ETFs. We also deal with the level and composition of the costs of ETFs, as well as the role of the ETF issuer. As well as other important questions: How safe are ETFs actually and for which types of investors are they suitable?

What are ETFs and how do they work?

ETFs are exchange-traded index funds (Engl. E Xchange T raded Fands). What an ETF is and how this popular form of investment works can be easily deduced. These funds are exchanged on the stock market, as the name implies. As a trader, you can buy and sell ETFs any trading day.

GOOD TO KNOW: While actively managed funds aim to outperform the reference index and thus the market, ETFs pursue a different investment strategy: They want to track the performance of the underlying index as precisely as possible .

What types of ETFs are there?

There are basically three ways of categorizing ETFs: by asset class, by replication method and by use of income.

  • ETFs on different asset classes
  • Physical vs. Synthetic Replicating ETFs
  • Distribution or retention?

What does an ETF cost? How does the cost put together?

Since ETFs are passive investment products that do not require fund management, the running costs are lower compared to actively managed investment funds. If you would like to get an overview of how much it costs you to own an ETF per year, you can find out about the so-called running costs (Total Expense Ratio, TER) on the website of the fund provider, in the sales prospectus or in the factsheet. This statistic is expressed as a percentage which represents the annual expense of operating an ETF. The TER consists of the fees for the administration, the safekeeping of the securities, license fees for the replication of the index as well as distribution fees, which are incurred for the distribution or the marketing of the fund, for example for the preparation of prospectuses. In addition, you as an investor incur additional costs for an ETF that are not included in the TER. For example, physically replicating funds incur additional rebalancing costs and synthetically replicating ETFs have swap fees. Of course, there are also fees for trading ETFs in the form of broker fees and spreads (difference between purchase and sale price).

GOOD TO KNOW: ETFs with a low total expense ratio (TER) do not necessarily generate a higher return than ETFs with higher ongoing costs.

What are the pros and cons of ETFs?

ETFs are considered to be inexpensive, transparent, broadly diversified, but also flexible, liquid and individual forms of investment.

ETFs are cheaper than other types of funds because the administrative effort is relatively low and therefore there are hardly any costs for ETF management. There is also no issue fee, which is partially charged for “entry” into an actively managed fund. ETFs guarantee transparency by always referring to a specific index – its composition is usually known and you can track its performance on a daily basis without having to look at your portfolio. However, ETFs are not all about advantages. Since index funds develop in parallel with the underlying indices, they are also subject to the same fluctuations – investors have to withstand this volatility in ETFs.

Advantages of ETFs

  • Comparatively low fees
  • Transparent and tradable every trading day       
  • Wide risk diversification possible            
  • Individual investment strategy can be implemented       
  • Largely protected as a special fund        

Disadvantages of ETFs

  • Fluctuations in value are unavoidable
  • Risk of loss present
  • No guaranteed profits
  • No individual investment decisions
  • Little opportunity to influence

How safe are ETFs?

The question of how secure ETFs are does not have a general response. They are covered as special properties in the case of the insolvency of the fund company or the custodian bank. But be careful: Exchange-traded index funds are also subject to normal market fluctuations and offer no protection against possible losses. With passive fund products, however, the broadly diversified indices may result in a lower risk than with investments in individual stocks.

What does an ETF issuer do?

An ETF issuer is the publisher of ETFs. He compiles ETFs on various indices and makes them available for exchange trading. Of course, the issuer also decides on the replication method and the use of income from the ETF. So whether the underlying index is replicated physically or synthetically and whether the dividends are distributed or reinvested. Even if ETFs are not actively managed, the issuer ensures that the composition of an ETF always corresponds to the reference index.

There are a few key metrics that investors should keep in mind when adding new securities to their portfolio. We will show you the most important share key figures from the fundamentals analysis, why they are important for buying shares and what is behind them.

Why beginners benefit from key figures when valuing stocks

Beginners in stock trading make the decision which blocks of stocks to buyor often do not sell easily. Risks cannot be completely ruled out when investing in stocks, but investors can reduce these risks to a calculable level. The most important tool for valuing stocks is fundamental analysis (also called fundamental analysis). By definition, fundamental analysis is a form of stock analysis that relies on key company metrics such as earnings, sales and cash flow. The aim is to calculate the “fair value” (value) of a company and its shares. In order to determine this, investment professionals check numerous share ratios as part of the analysis. Analyzing stocks based on key figures can increase the chance of finding stocks with a positive price development.

GOOD TO KNOW: The foundation analysis is a comparatively complex process for stock market professionals. To evaluate the profitability of a company, not only the individual key figures but also the economic environment are considered as part of a global analysis. In addition to the individual values, experts also analyze the respective industry.


The following key figures give you an overview of the relationship between company and share price development of a stock corporation.

1. The price-earnings ratio (P / E)

The price-earnings ratio of a share is one of the most well-known figures in the stock valuation.

For this purpose, the current price of the share is divided by the company profit of the previous year. In a much simplified way, when determining the company profit, also known as the annual surplus, the sales revenues are compared with the expenses. If the expenses outweigh the revenues, one speaks of an annual deficit. The company made a loss in the period under review. Determining a P / E ratio would not be helpful in this case.

Good to know: You can find current prices and important figures in our comdirect share informer.

2. The equity ratio (EKQ)

The equity ratio is an important part of risk analysis when valuing stocks. The rate is, among other things, an indicator of how solidly a company is financed. The EKQ is also simply calculated:

The total capital is formed from equity and debt. Debt capital is capital that is made available to companies by third parties, e.g. banks in the form of loans with different terms. Equity describes the financial resources that the owner (s) brought into the company. This also includes undistributed profits that are retained by the company for investment.

What does the EKQ say?

A high equity ratio is assessed as positive, as the company finances itself predominantly from its own resources and does not, or only to a small extent, rely on outside capital.

The higher a company’s equity ratio, the lower the probability of insolvency and the higher the creditworthiness. The higher credit rating in turn makes it easier for companies to raise outside capital on the capital market.

IMPORTANT: It is difficult to compare the equity ratios of companies from different industries. For example, the equity requirements of financial companies are, on average, significantly lower than those of industrial companies. So when you analyze the EKQ, it should always be done in an industry comparison.

GOOD TO KNOW: You can find out how high a company’s equity is in the respective quarterly reports or balance sheets that companies regularly publish.

3. The price-to-book value ratio (KBV)

To find out how a company’s equity is related to its market capitalization, you can calculate the price-to-book ratio: KBV = share price / book value of the share

The book value corresponds to the equity, which is divided by the number of shares issued. It thus indicates the ratio of equity to the number of shares.

4. The price-to-sales ratio (KUV)

The P / E ratio provides information about how highly a company is valued on the stock exchange. But not every company shows a profit. While the profit of a company can be embellished or diminished, the turnover can hardly be manipulated.

To calculate the price-sales ratio (KUV), the price per share is divided by the sales per share.

5. Price to Cash Flow Ratio (KCV)?

The KCV ratio indicates how high each liquid euro is valued on the stock exchange. It is calculated according to the formula: price per share divided by cash flow per share.

What does the KCV say?

The price to cash flow ratio (KCV) can hardly be manipulated. The KCV can therefore be used in addition to the KGV. The term cash flow describes the inflow of money during a period. It marks the balance of deposits and withdrawals during a financial year. The cash flow is systematically higher than the profit, since taxes, interest and depreciation are not taken into account. The cash flow shows the liquidity of a company. As with the P / E method, the lower the P / E, the cheaper a share is. Value investors rely on values ​​with a KCV of less than ten.

6. The dividend yield

The dividend yield gives investors the opportunity to find out the relationship between the share price and the dividend paid or announced. The dividend yield is published by many public companies for investors.

GOOD TO KNOW: The dividend yield can be calculated either with the last dividend paid out or with the announced dividend. Both methods have their advantages and disadvantages. Since the forecast dividend can change by the end of the year, the dividend yield should also be seen more as a forecast and not as a benchmark. If the calculation is carried out with the “old” dividend, the figures are fixed, but possible conclusions about the upcoming dividend payment are also speculative. When publishing the dividend yield, companies usually use the current share price and the last dividend paid.

What does the dividend yield say?

If you bought the stock at a cheaper price than the current one, your dividend yield may also increase. If the share price is higher, your dividend yield is likely to decrease. It is important that you analyze the development of the dividend yield over a period of several years. That is the only way to guarantee that the number will continue to rise steadily. You should also take into account that you are not entitled to a return when you buy shares. The shareholders’ meeting will determine whether a return will be paid.

The savings account is an investment without a fixed term, with which the balance usually pays variable interest. The savings account is probably the best-known savings account.

The savings account is used to invest and accumulate money and cannot be used for daily payment transactions. The saver receives a savings certificate from the bank. Traditionally, this is a savings book in which the bank records deposits and withdrawals. In order to withdraw money, it is usually necessary to present the savings account. Furthermore, the contractual agreements also regularly contain a clause authorizing the bank to pay out credit to anyone who presents the savings book. As an alternative to the savings book, a savings card can also function as a savings certificate. In practice, the savings card is increasingly replacing the savings book.

What are the risks?  

Interest rate risk: The interest rate can rise or fall during the investment period. These offer the customer the prospect of compensation going beyond the legal entitlement – but without a legal entitlement.

How are the performance, profit and benefits of the savings account structured?       

You receive an interest rate that is based, among other things, on the respective market interest rate. The interest rate varies from institute to institute and can be adjusted by the banks at any time.

What obligations do I have towards the bank?     

You are obliged to carefully keep the savings certificate. Entries in the savings book or account statement must be checked for correctness immediately upon receipt and objections raised immediately.

When can I have access to the money in the savings account?    

As a rule, you can dispose of the accrued interest within two months of being credited, regardless of the amount of interest income and the notice period. Thereafter, the interest is subject to the agreed termination rules.

In addition, there is no entitlement to early repayment of the savings deposit. If you want to withdraw more money, you have to cancel this partial amount. When terminating, the notice period set by the bank (at least three months) must be observed. With many banks you can have higher amounts of credit at your disposal without observing the notice period. However, the bank then demands so-called advance interest. The advance interest relates to that part of the withdrawal amount that exceeds the maximum amount per month.

What details does the bank have, among other items, to supply me with?       

Every German credit institution is legally obliged to inform its customers about the individual services of its products and the associated prices.

From the bank’s list of prices and services, you can see which costs are incurred for the savings account, but also which interest is granted. The current interest rate is posted, for example, in the branches. Before concluding the contract, the bank must give you a detailed list of prices and services. Every credit institution is also legally obliged to inform its customers about the statutory deposit insurance when concluding a contract and from now on once a year.

Where can I open a savings account?         

A savings account can be in a bank open. Knowledge and advice can be accessed from the appropriate provider in the branches, electronically or by phone. Think on how long and for what reason you intend to spend money in advance and closely review the circumstances.

Who is the savings account suitable for?   

The savings account is suitable for those investors who prefer a conservative, safe investment to build up reserves and do not need the flexibility of a call money account.


Which methods are important in fundamental analysis. P / E ratio and dividend yield are not everything: Buy low, sell high – the profit lies in purchasing. Easy said. But when is a share really cheap? When evaluating companies, professionals never rely on just one key figure. In addition to analyzing the company’s most important products, the market and the competitive environment, they scrutinize a whole bunch of fundamental data. Among the most important for value investors – in addition to the price / earnings ratio, earnings yield and dividend yield – the key figures:

  • Ratio of price to book value,
  • Course to sales,
  • Course to cash flow,
  • EBIT and EBITDA margin.

What is the price-to-book value ratio (P/B)?

The price / book value ratio compares the current share price with the book value per share shown in the balance sheet. In simple terms, the book value corresponds to the company value in the event of liquidation: liabilities and intangible assets are subtracted from the sum of the assets. The higher the value, the more expensive the company. A low P /B alone is not enough for a buy recommendation. Because it can have different causes:

  • The company is undervalued because it has not yet been discovered by institutional investors. Therelation between quotation and balance value is low.
  • The company’s return prospects are miserable. Then the relation between quotation and balance values also low.

A low P / B is therefore particularly convincing in connection with a low price-earnings ratio and a clear corporate strategy. As a rule, a company is valued favorably if the share price is below the book value per share (P / B <1).

What is the Price to Sales Ratio?

The P / E ratio provides information about how high a company is valued on the stock exchange . But not every company shows a profit. While the profit of a company can be embellished or diminished, the turnover can hardly be manipulated. To calculate the price-sales ratio, the price per share is divided by the sales per share. For example, company A has one million shares that are trading at $80.

Conservative value investors make sure that the price-sales ratio is not quoted higher than one. For many traditional brands, for example in trade, chemistry and automotive engineering, for example at Daimler, the price-sales ratio is actually lower.

The shortcoming of the key figure: The costs of the company are completely ignored. However, these costs have a major impact on a company’s profitability (EBIT margin). According to the strict price-sales ratio standard, high-performance companies with high profitability such as Apple or SAP would never end up in the depot. Therefore, the price-sales ratio should never be created solely for an investment decision.

What is the Price to Cash Flow Ratio?

The ratio of price to cash flow is also difficult to manipulate. The price to cash flow can be used in addition to the price-earnings ratio.

The term cash flow describes the inflow of money during a period. It marks the balance of deposits and withdrawals during a financial year. The cash flow is systematically higher than the profit, since taxes, interest and depreciation are not taken into account. The cash flow shows the liquidity of a company. The ratio indicates how high each liquid dollar is valued on the stock exchange. It is calculated according to the formula: price per share divided by cash flow per share.

What do the EBIT margin and EBITDA margin say?

The EBIT (earnings before interests and taxes) is calculated from the annual surplus before taxes and interest. The idea of ​​EBIT: The operating profitability of companies should be made comparable regardless of the capital structure. Because unlike the annual surplus or the net return on sales, debt or equity ratios do not matter. Depreciation is also taken into account in EBITDA. The EBITDA also enables companies that report under different laws to be compared. The profitability of a company is measured with the percentage EBIT margin or the EBITDA margin on sales. An example: With sales of 100 million and an EBITDA of 15 million, the margin is as follows:

Companies willing to invest often measure themselves by the EBITDA margin. This is especially true for companies from the technology or telecommunications industry, because they often incur high depreciation, which reduces earnings.

Over the weekend, Bitcoin briefly dared to reach the $58,000. However, the BTC bulls were not really able to counter the selling pressure, which is why the number one digital asset is currently trading just below it again at 57,200 dollars.

Regardless of the unimpressive price action, however, “BlockTower Capital” CIO and co-founder Ari Paul believes Bitcoin is in a full-blown bull market – and could increase in value tenfold within the next 24 months.

That would take Bitcoin to around $400,000 per coin based on current prices. In a new tweet, the blockchain investment firm CEO explains his take on the current bull run to his nearly 150,000 Twitter followers. Paul believes the bull market can last until the end of 2022.

With corresponding consequences for the bitcoin price: it could settle between $100,000 and $400,000, starting from its current price of $57,200. And: Paul believes that altcoins will do even better.

By that, Paul could mean that he thinks it’s likely to see returns of 1,000 percent or more on many altcoins. Paul:


The entrepreneur has expressed this altcoin optimism in previous interviews. In his estimation, simply buying and then holding coins like Bitcoin might be the best crypto strategy. Paul:


PlanB sees bitcoin at $100K or $288K.
In parallel with Paul’s bitcoin forecast, pseudonymous top analyst PlanB has also updated his bitcoin price target. He currently considers two variants likely: the S2F target at an average of $100K and the S2Fx target at an average of $288K.

If the bull run continues in 2021 and follows a price path like 2017, the S2F target takes hold and PlanB considers $100k per bitcoin likely.

However, the bull run could also be more similar to that of 2013. In that case, PlanB updated its Bitcoin S2Fx price target to $288,000.

Either way, a Bitcoin price target in the six-digit range still sounds like dreams of the future for many investors at the moment. However, the past has shown how quickly Bitcoin can rise parabolically in its valuation.

What is base rate? The key interest rate set by the CB is an important instrument of monetary policy. Is the CB lowering the key rate? More than once this question was answered with yes. But what actually is the key interest rate and what is the significance of cuts or increases? We look at the implications for monetary policy and private investors. We also show how the key interest rate has developed in the past.

Base interest rates play an important role in the monetary policy of every central or central bank. The base rate denotes the interest rate at which the central bank conducts business with commercial banks. It is set unilaterally, the banks only have the option to conclude deals or to forego it. The central bank thus influences interest rate developments and has an indirect influence on the banks’ deposit and credit policies. Strictly speaking, the term “the key rate” is a bit misleading. Because there are usually several interest rates or interest ranges in which central banks offer the credit institutions different types of business. Specifically, there are three interest rates at the CB:

The main refinancing rate: At this rate, commercial banks can borrow money from the CB for short periods of one week or more. When the key CB interest rate is mentioned, the main refinancing rate is very often referred to. It is the most important of the three interest rates and is the focus of public reporting.

The deposit rate: It denotes the interest rate at which banks can temporarily park excess liquidity with the CB until the next day. You are then practically yourself a short-term investor. This setting of interest rates mainly affects the investment and lending rates . The deposit rate is otherwise less considered, but it made a name for itself when the CB first introduced negative interest rates. In addition, the deposit rate represents the lower interest limit for the overnight money.

What functions does the key rate have?

The key interest rate is a key monetary policy control instrument. The banks base their conditions on the conditions for their own business with the central bank. The central bank is a key financing partner for them. If the key interest rate is lowered, this tends to lead to cheaper loans and lower interest rates on investments. The banks can then obtain more affordable liquidity from the central bank themselves and extend more loans. At the same time, they are less dependent on their customers’ deposits – because they can fall back on the money of the central banks. A rate hike has exactly the opposite effect.

The original function of the (key) interest rate policy is to secure price stability through low inflation. If the signs of inflation multiply, the central bank will raise the key interest rate to curb bank lending. At the same time, this makes spending more difficult for private households and companies. Reins are placed on excessive demand, the money supply becomes scarce and inflation slows down. Such rate hikes often take place in phases of economic boom. In times of economic downturn, however, the central bank tends to react by lowering the key interest rate to prevent deflation. In the worst case, a deflationary spiral occurs – a slide into a self-reinforcing economic downturn.

The ultimate goal of CB: to generate more economic growth to cope with the crisis.

Exchange rate effects of key interest rates: A further effect of interest rate policy can be exchange rate effects. Interest rate differentials are an explanatory variable for changes in exchange rates. Lower key interest rates tend to make one’s own currency “softer” because there is increasing demand for money from currency areas with higher interest rates. This also has an overall economic effect. Exports are favored when exchange rates are weaker and imports are made more expensive.

It should not be forgotten that changes in key interest rates also have an important signal function beyond their pure economic effect. They indicate the direction in which the central bank is moving with its monetary policy and how it assesses the economic situation. Exchanges register and “process” such signals with particular sensitivity. Moreover, key rate hikes are unlikely in the near future. The CB has made it clear that it intends to stick to its low interest rate policy and its monetary expansion for the time being in order to cope with the consequences of the corona.

What is the impact of the key interest rate on bank conditions?

Central bank dealings with the banks are short-term in nature. Accordingly, the key interest rates are short-term interest rates. Changes in key interest rates are therefore the quickest and most direct way of influencing conditions on the short-term money market. In the case of medium- and longer-term interest rates, however, the effect is not quite as “striking”. Changes in interest rates often only arrive with a time lag and are weakened. In the case of long-term interest rates, other influences are often also relevant for interest rate developments. This can mean that a key rate change “at the long end” is largely ignored, but it does not have to be.

Looking at the development of interest rates for various banking transactions over the past few years , the following can be determined:

The conditions for bank deposits (overnight money, time deposits, savings deposits) have reacted comparatively sensitively to changes in key interest rates – with resistance at the zero interest rate line. Negative interest rates in the banks’ deposit business remain the exception – despite negative interest rates for the CB deposit rate that have existed for some time. The overdraft rates react relatively sluggishly to changes in key interest rates and only move moderately.

The interest rates for installment loans have roughly followed the key rate trend – with a time delay and with a significant interest rate gap.

“One man’s joy is another’s pain”, this old saying seems made for changes in key interest rates. Falling key interest rates tend to make financing cheaper for borrowers. It then becomes easier to take out loans and bear the burden of interest and repayment. For investors and savers, however, it becomes less profitable to save in interest-bearing investments . Alternatives are required for investing – for example stocks, equity funds, ETFs or other asset classes. The stock exchange likes to react to interest rate cuts with “jumping for joy” in the form of price gains because companies benefit from lower interest rates. But that is not automatic. With higher key interest rates, the opposite is true.

The savings bonds is a one-time investment at a bank with which you can invest a sum of money for a specific term of one to ten years at a fixed interest rate.


The interest rate of the savings bond can be staggered over time: its amount depends on the selected term and the offering credit institution. In addition to the annual interest payment, savers can also choose the so-called accumulating investment. This means that the interest accumulates until the end of the term and is only then paid out.

Since the term of a savings bond usually extends over several years, this is referred to as a medium-term investment horizon. A termination before the end of the term is usually excluded or only possible with a loss of interest.

Possible goals: When can a savings bond be a sensible investment for me?       

Savings bonds are among the deposits. They are a way of saving if you prefer a medium-term investment. However, you should be sure that you will be able to dispense with the sum invested during the term. Because a prior disposal of the saved is only possible with a loss of interest or even completely excluded. However, it is possible to borrow a savings bond and use it as security for a loan taken out. A savings bond can also be an interesting form of investment if you want to build up assets or save something for your retirement provision .

Risks: What are the risks?    

Exchange rate risk / business risk: There is no interest rate risk as the interest rate is contractually fixed for the entire term of the purchase.

Foreign currency risk: This risk does not exist because you are buying the savings bonds.

Issuer Risk / Credit Risk: If you invest more than this, a risk may arise. Inquire about the deposit protection system of the bank or savings bank before concluding the contract.

Availability: You cannot dispose of the money early during the term. You can, however, borrow a savings bond and use it as security for a loan you have taken out.

Income risk: If interest rates rise significantly on the market, the saver will not benefit: because the interest rate and term are contractually agreed. This means that you are contractually bound to the lower interest rates and you cannot renegotiate any market-appropriate interest rates. But even falling or negative interest rates do not change anything in the agreed interest rate. In contrast to a fixed-term deposit, the savings bond can contain a so-called subordination agreement. This means that the statutory deposit protection does not apply to such a savings bond. If the bank becomes insolvent, you will not be reimbursed the USD 100,000 usually. “guaranteed. In addition, your claims from the bankruptcy estate will be treated subordinately. That is, other creditors will be compensated before you. For the higher risk, however, you usually get higher interest rates.

You should therefore check carefully whether a savings bond with a subordination agreement is suitable for you. Only entrust your money to providers whose seriousness there is no doubt.

What about the performance, profit and benefits of the savings bond?

Depending on the term, you will receive an interest rate based on the respective market interest rate, i.e. the refinancing rate of the credit institutions. You agree on this interest rate when concluding the contract. It is then binding for both contracting parties for the entire term. If the interest rate falls on the market or if there is even a negative interest rate, you can still be sure of the agreed interest rate until the end of the contract. Since a fixed interest rate has been agreed, you already know at the beginning of the investment what interest you can calculate with at the end. When buying a savings bond, there are usually no fees that reduce the interest gain.

NOTE: Bear in mind that savings contracts with longer terms bring higher interest rates, but you will only be able to dispose of your money after several years.

What obligations do I have towards the financial institution?    

As a saver, you generally have no particular obligations to fulfill. However, you must cancel your savings bond if the contract provides for an automatic new investment at the current market interest rate and you do not want this. Otherwise you cannot dispose of your money.

Where can I take out a savings bond?        

You can get information and advice in the branches of banks , but also online on the Internet or by telephone from the respective provider. You can then also conclude the contract for your savings bond there.

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