There is something very satisfying about unearthing a hidden gem. It is probably the ultimate in one-upmanship to discover something that others might have missed. The experience can be even more enjoyable if the hidden gem costs next to nothing. So imagine my delight at discovering something that has been sitting right under my nose but didn’t even realise existed. Let me explain. River deep mountain high One day whilst wandering around Singapore’s River Valley Road area, I chanced upon a poorly-positioned sign that pointed to a nearby stop for river taxis. River taxis? I didn’t even know we…
The experience can be even more enjoyable if the hidden gem costs next to nothing. So imagine my delight at discovering something that has been sitting right under my nose but didn’t even realise existed. Let me explain.
River deep mountain high
One day whilst wandering around Singapore’s River Valley Road area, I chanced upon a poorly-positioned sign that pointed to a nearby stop for river taxis.
River taxis? I didn’t even know we had any in Singapore. Curiosity got the better of me. I just had to find out more.
As it turned out, river taxis have been operating in Singapore for around a year already. However, for reasons that only commuters can explain, the service is not that popular.
The river taxi service runs along the Singapore River from Jiak Kim Bridge near Great World City to Singapore’s Central Business District and a bit beyond. It costs all of $3 for a one-way trip.
The best $3 spent
All I can say is that it was probably the best $3 that I spent that day, as as I snapped away at the delightful scenes along the way on my smartphone. The breath-taking views that unfolded are second to none, as the boat snaked its way down the waterway. We sometimes forget just how stunningly-beautiful our Garden City really is.
But have you ever wondered why hidden gems even exist, especially in a world where information is said to be so openly available?
The answer is simply because we aren’t always aware of what is on offer unless it is presented to us on a plate. In other words, it isn’t what we look at that matters – it is what we see that counts.
Something very similar happens in the stock market.
Many of us would like to think that the market is somehow efficient. That somehow everything we need to know should be neatly gift-wrapped and tied up with a bow. But as Warren Buffett once quipped: “I would be a bum in the street with a tin cup, if the markets were efficient“.
Hide and seek
Thing is, markets are far from efficient and hidden gems can often be the result of the inherent disorder. But, all too often, we focus on what is visible and popular rather than what is shunned and hidden from view.
Price action and value attraction But it is important to remember that you can’t buy what is popular and expect do well, as Warren Buffett once pointed out. Consider the recent banking results. They were astoundingly good. But the time to have looked at banks was back in 2008 when financial institutions were rocking on their heels.
In 2008, Oversea-Chinese Banking Corporation (SGX: O39) and United Overseas Bank (SGX: U11) were trading at below their book values. Meanwhile, DBS Group (SGX: D05) was valued at less than half the value of its net assets. Today, though, you would have to pay a premium to own them.
All too often investors tend to buy what other investors are buying. Put another way, people are drawn to price-action rather than value-attraction.
However, what worked for someone last week doesn’t necessarily mean that it will work again for you this week. Or in the words of Warren Buffett: “The dumbest reason in the world for buying a stock is because it is going up.”
This article first appeared in Take Stock Singapore.
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