Year-end Strategy: The Path to a Successful Portfolio

The end of the year offers an excellent opportunity to reconsider the state of your portfolio. However, this reflection can quickly turn into concern if there is a gap between the current state of the portfolio and one's own expectations. Instead of impulsive actions, a strategic consideration for wealth accumulation is advisable. The key is conscious investment in high-quality companies, identifying risks that could jeopardize the investment thesis, and long-term commitment to successful enterprises. A central aspect of portfolio assessment is formulating an investment thesis for each asset. These can vary in detail, but it is crucial to know the business model, objectives, and personal conviction for investing in the company. Such a thesis is also useful for companies on your watchlist, to act with conviction when a favorable opportunity arises. A successful example is Microsoft. The company has transformed from moderate revenue growth and weak margins to a high-margin giant, largely thanks to Microsoft Cloud and product improvements. Microsoft integrates artificial intelligence across its entire product range, including Microsoft 365, GitHub, and Azure, continuously generating high profits. With a balanced mix of hardware and software, as well as valuable assets such as LinkedIn and a strong position in the gaming market through Xbox and Activision Blizzard, Microsoft remains impressively diversified. The sufficient surpluses enable dividend growth and share buybacks, facilitating the handling of stock-based compensations and increasing the value of existing shares. Microsoft is well-positioned financially to gain market share or make strategic acquisitions even in challenging times. Although the high price-earnings ratio occasionally results in increased pressure to deliver outstanding growth, there remain many long-term ways to increase profits, justifying a holding period even amid temporarily declining stock prices.