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Do You Have What it Takes To Handle a 385% Gain?

If you have invested in  a particular company – whose share price performance is profiled in the chart below – for the past 10 years, you would have gained roughly 385% from doing nothing. But, there’s more to it than meets the eye.

By looking at the chart since 2004, we can see that the stock has been taken for quite a ride. You, as an investor, would have seen your stock stagnant for close to three years from the start of 2004 to the end of 2006. And from that point on, within a few months, you would have more than doubled your money when the stock jumped from 40 cents to more than a dollar. “Finally! My investment has paid off,” or so you think.

Source: Yahoo Finance

Sadly, you would then see your stock drop all the way back down to 40 cents over the next 2 years going into 2009.

So, now you would have invested in the company for 5 years, earn almost nothing on your investment, and to top it all off, find yourself stuck in the middle of a global financial crisis.

The story for the next 5 years since 2009 is similar, with huge jumps and drops, but at the end of it all, you’ll have earned a 385% return as of last Friday.

I’m sure most investors would not turn up their noses at a 385% gain in a decade. But when looking at that roller-coaster of a ride with the stock in question throughout the past 10 years, are we supposed to just do nothing?

Controlling Your Emotions

The stock in question is the casino and resort operator Genting Singapore (SGX: G13) and the main issue here is how can we control our emotions. While doing nothing reaped some nice rewards with Genting back then, the act of doing nothing itself is often easier said than done.

Warren Buffett once mentioned that to be a great investor, you do not need to have a high IQ but you do need to have the right temperament.

Can we train ourselves to have the right temperament? Although I do feel that it is almost impossible to be completely “emotionless” about our investments, there are ways we can prevent ourselves from making rash and stupid financial decisions that are caused by our emotions.

What are those ways? Stay tuned at The Motley Fool Singapore as I’ll be bringing you more on the topic soon!

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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 contributor Stanley Lim doesn’t own shares in any companies mentioned.