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Five Ways To Double Your Money This Year

five

The Singapore market has, for want of a better word, been lacklustre this year. The Straits Times Index (SGX: ^STI) has fallen 4% year-to-date, which most investors will probably describe as disappointing.

However, the same cannot be said of investors who had the foresight, though some might call it luck, to have picked any one of the following five shares at the start of the year. They are Blumont Group (SGX: A33), which has gained 558%; Innopac Holdings (SGX: I26), which has surged 104% and Polaris, which is up 188%. The quintet also includes Asian Micro Holdings (SGX: 585) and EMS Energy (SGX: 5DE), which are up 133% and 103% respectively since January.

If you had bought shares in any one of the five companies your investment would have at least doubled in value.

You are unlikely to find anything like those sorts of returns amongst the large caps because as Jim Slater, the master of small-cap investing, once said: “Elephants don’t gallop”.

With the exception of Blumont, the rest of this year’s extraordinary performers can be described as either small-cap or micro-cap companies. Their market values range from S$23m in the case of Asian Micro Holdings to Innopac, which is worth around S$490m. Blumont is currently worth S$3.3b, which, it should be pointed out, was not the case at the start of the year when it was only worth S$500m.

Such is the attraction of small caps shares. And such is also the reason why many private investors enjoying digging deep into the small caps for hidden gems.

The reasons, I think, are obvious:

  • Smaller companies can grow their earnings at a faster clip than large companies
  • Smaller companies are generally ignored by most analysts who tend to focus on large caps
  • Smaller companies tend to have clearer accounts, with little in the way of legacy clutter

I am not suggesting for one moment that you should ditch your large caps and bet the farm on small caps. But the happy truth is that if think you have the ability to pick undiscovered shares, then dipping your toes into a speculative share or two could help spice up your portfolio.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.