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A Remarkable Singapore 100-Bagger

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So, here is the story of the Singapore 100-bagger.

I met a man the other day who told me that he bought something worth $30,000 for just $300. Does that sounds too good to be true? Let me tell you more.

One thing that I quite like to do is mosey around the back alleys of Singapore. Point is, shopping malls and high streets are great places, if you enjoy that sort of thing. But I would much rather venture off the beaten track.

One day, not too long ago, I wandered into a backstreet antique shop. To the untrained eye it would probably look like a shop full of junk. After all, as the old joke in the antiques trade goes: “We buy junk. We sell antiques.

Jumble ensemble

Dotted around the shop were tatty bits of furniture, broken clocks and rickety chairs that have probably seen better days. But peppered around the ensemble of jumble were some valuable pieces of Singapore’s heritage.

As I chatted with the owner about some of the more interesting objects on display, he related to me the “how”, the “when” and even the “where” he acquired the various items in his shop.

More often than not, it would seem that the pieces came about from house and office clearances. This is when owners vacate their properties and discard unwanted items – usually for next to nothing.

At one particular house clearance, the young owners, who had inherited the family home from their parents, were in a rush to dispose of everything. The “everything” in this instance included some wood hangings that were worth a lot more than their shabby appearance would suggest.

The children, who were keen to get rid of all the “old stuff”, sold everything for $300. They were relieved to be shot of what they thought was just some old tat. Little did they know, though, the items were worth a hundred times more.

Bargains galore

Bargains like that don’t just happen in the antiques trade. They happen quite regularly in the stock market too. Time and again we see shares that could be worth much more than their intrinsic value, discarded by traders and investors for reasons that have very little to do with valuations.

Some notable examples of discards this year included Thai Beverage (SGX: Y92) that was tossed aside because of political worries in Thailand and Jardine Cycle & Carriage (SGX: C07) because of tapering concerns affecting Indonesia. Hongkong Land (SGX: H78) was another share that was unwanted on fears that an economic slowdown in China could affect property prices.

What is remarkable is that the shares were sold on the back of noise rather than fundamentals.

I can understand a share losing some – or in some extreme cases all – of its value, if prospective earnings warrant it. However, frequently shares are unloved for reasons that have little to do with the future profitability of the business.

Noise and news

Legendary investor, Peter Lynch, once said: “Events occur – hurricanes, wars, political instability, currency and bank crises – that make investors nervous and cause market volatility.

He went on to say: “It does get nasty at times, but it shouldn’t cloud investors’ judgments about thinking long term. The key organ here is your stomach. Everyone has the brainpower, but not everyone has the stomach for it.

Unfortunately, noise can and does cloud many investors’ judgements. They are swayed by things that might appear vitally important today but have little or no impact over the long term.

Here at Motley Fool Singapore we continually urge investors to focus on the long term. Peter Lynch does, too. He once told every investor to remember that: “The bottom line is to have a responsible plan for your investments. Know what you own and why you own it.

Peter Lynch is right. There is far too much at stake not to focus on the long run.

This article first appeared in Take Stock Singapore.

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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.