“What’s Your View on the Market?”

The title of this article you’re reading now came from a question asked by a friend whom I was having lunch with recently. Due to the nature of my job – writing about investing and the stock market for The Motley Fool Singapore – I do get that a lot when I’m meeting friends and family. But, my answer’s always the same: “I honestly don’t know. And frankly, I couldn’t care less.”

If that sounds flippant, then please hear me out. After answering them, I’ll often add on, “The reasons are two-fold. First, I don’t think there’s hardly anyone who can consistently be correct with general market movements. Second, I’m an investor in individual companies, and hence would be a lot more interested in their corporate future as opposed to where the market will be.”

Even experts can’t get market predictions right

Back in December last year, I wrote an article titled Why You Shouldn’t Listen to Predictions When Investing. In it, I made a table that highlighted the difference between where the S&P 500 (a widely-followed American stock market index) was and where analysts predicted them to be. These analysts all came from top-notch international financial institutions and had made their predictions at the start of 2013 on where the S&P 500 would be at the end of that year.

When that article was written on 12 Dec 2013, these analysts had missed the S&P 500’s actual level by some 16.2% on average. Here’s an updated version of the table using the S&P 500’s close of 1,848 points as of the end of 2013.


S&P 500 Target

% Miss (as of 31 Dec 2013)

Wells Fargo

1,390 24.8%


1,425 22.9%

Morgan Stanley

1,434 22.4%
Deutsche Bank 1,500


Barclays 1,525


Credit Suisse

1,550 16.1%
HSBC 1,560


Jefferies 1,565


Goldman Sachs

1,575 14.8%
BMO Capital 1,580


JP Morgan

1,580 14.5%




BofA Merrill Lynch


Citi 1,615





Source: Business Insider

Looking at the table above, suffice it to say that even the ‘experts’ can often get general market predictions wrong. When faced with such data, it seems that relying on market predictions would not help increase the odds of success for any investor.

Individual companies can perform very differently from the market

The Straits Times Index (SGX: ^STI) is often used as the benchmark when referring to Singapore’s stock market; in local investing-parlance, the ‘market’ would equate with the index. Back in Oct 2007, the Straits Times Index had hit a peak of close to 3,900 points before the Great Financial Crisis of 2007-2009 kicked in. At its current level of 3,246 points, it’s still at least 15% below that pre-crisis mark. For investors who are concerned with the path taken by the general market, Singapore-listed shares must have seemed to have fared very poorly for the past seven years.

Yet, for investors who are focused on individual companies, the results can be very different. Using Sarine Technologies (SGX: U77), Ezion Holdings (SGX: 5ME), Jardine Cycle & Carriage (SGX: C07) and Raffles Medical Group (SGX: R01) as examples, here’s how those shares have performed since the Straits Times Index’s pre-crisis peak.


Price: 10 Oct 2007 Price: Today % Change

Sarine Technologies

S$0.528 S$2.61 394%

Ezion Holdings

S$0.70 S$2.13 204%
Jardine C&C S$19.10 S$47.50


Raffles Medical S$1.51 S$3.28


Straits Times Index 3,876 3,246


Source: S&P Capital IQ

It’s easy to point out how those four shares had outperformed the Straits Times Index by a wide margin. But why did that happen? When we look at how much these companies had grown since 2007, the reasons become clearer.


Earnings per share: 2007 Earnings per share:
% Change

Sarine Technologies

US$0.0253 US$0.0696 175%
Ezion Holdings US$0.0071 US$0.164


Jardine C&C US$0.985 US$2.57


Raffles Medical

S$0.074 S$0.154


Source: S&P Capital IQ

The gains in their share prices did not come in a vacuum – they came about because their profits had increased greatly over the years. Investors who were concerned with the development of the businesses underlying those shares might have spotted strong growth in the years ahead. And if they had invested accordingly, without focusing on the general market, they’d have come out ahead of the pack with some satisfying gains in their portfolio.

Foolish Bottom Line

All told, it’s important for investors to realise that how expensive or cheap the ‘market’ is, or where the ‘market’ might be headed next, can be very different from the situation that individual companies might find themselves in. As investors in individual companies, our job should really be about finding companies that are presenting the best values at any one point in time based upon their business fundamentals.

Even if you really do develop a view on where the market might be heading next, never lose sight of what’s truly important when it comes to investing – the eventual development of a company’s business and the price you’ve paid to be a partial owner of that company.

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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 writer Chong Ser Jing owns shares in Sarine Technologies and Raffles Medical Group.