Investing Lessons From A Char Kway Teow Seller

The Motley FoolNestling in one of Singapore’s tourist hotspot is a well-known hawker centre. There is nothing too remarkable about that.

And situated in the hawker centre are two char kway teow sellers. There is nothing especially surprising about that, either.

But what is notable is that one seller of the popular stir-fried flat rice noodles is persistently packed. The other is considerably less busy. It can sometimes take as long as 30 minutes to get served at the more popular food stall. Yet, diners are happy to queue patiently for their fare, without as much as a murmur of complaint.

Doing my own research

In the interest of satisfying my curiosity – and also my grumbling stomach, which thought that it had become detached from my throat – I decided to do my own research. I queued up first for one plate of the rice noodles and then for the other.

Surprisingly, there was no difference in price between the two hawkers’ offerings. We mustn’t ignore time, though, for which there is an associated cost.

With the two plates of char kway teow placed carefully in front of me, I began my analysis. (If my doctor happens to be reading this article, I have to confess that I did indeed polish off both plates of food. But this is definitely a one-off experiment. I am also religiously popping my daily dose of statins.)

At a superficial level, there was nothing much to choose between the two plates of rice noodles. They both looked quite similar.

At a deeper level, however, the differences quickly became apparent.

Satisfying your hunger

The more popular char kway teow was slightly more fragrant. It also contained a few more cockles, more slices of fishcake and a tad more of those to-die-for crispy croutons of pork lard that explode in your mouth.

What’s more, the way that the flavours danced on my taste-buds just made me return for one mouthful after another.

Warren Buffett once said: “Price is what you pay, value is what you get.” He could, quite easily, have been talking about char kway teow. But I am almost certain he wasn’t. Instead, he was referring to investing.

Thing is, if all you want is to satisfy your hunger for inflation-beating stock-market investments, then a simple, low-cost stock market index tracker would probably suffice. Over the last 20 years, the Straits Times Index (SGX: ^STI) has delivered a total return of around 5%, which is better than the rate of inflation.

An investment of, say, S$10,000 in a portfolio of shares that mimicked the Singapore benchmark index would have turned into over S$26,000 after two decades. That is not at all shabby.

Beating the market

But more discerning investors could have done better by targeting higher-quality shares.

For instance, a similar investment in Oversea-Chinese Banking Corporation (SGX: O39) in 1994 would have grown to nearly S$45,000. Meanwhile, an investment in Keppel Corporation (SGX: BN4) would have turned into S$68,000.

Away from the benchmark index, S$10,000 invested in Singapore’s second-oldest company, Boustead Singapore (SGX: F9D), in 1994, would have ballooned into….wait for it….over S$190,000.

Price is what you pay, value is what you get” is at the heart of Motley Fool Singapore’s thinking when we look at shares. We are always on the lookout for market-beating investments.

Thing is, you don’t need to have too many of them in your portfolio. You need just enough to build a diversified portfolio that could, over time, generate returns that are better than the market.

And once you have identified the best shares for your portfolio – just as when you have found the best char kway teow seller in town – you can’t help but keep adding dollops of money to it, whenever the opportunity presents itself.

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.