Investing Lessons From A Wannabe Chef And Dairy Farm Holdings

The Motley FoolI was watching one of those highly-addictive food programmes on television the other evening. These are the type of cookery shows which try to prove that even amateur chefs can cook with ingredients that we have never heard of and use utensils we didn’t know existed.

In the particular episode that I happened upon, a wannabe chef had spent so much time fretting over the presentation of his dish that he forgot to make sure the meat was properly cooked. As it turned out, his steak was so raw that I could have sworn I saw it move.

Out with the old, in with the new

Yes, it is important to pay attention to the finer points. But it is crucial to not lose sight of the bigger picture. What is the point of having a well-presented plate of food, if it is going to be totally inedible?

Just recently, the Monetary Authority of Singapore and the Singapore Exchange announced significant changes to the way that Singapore shares will be traded.

Not before time, Singapore will be joining the enlightened by moderating its antiquated rules regarding board lots. Never have I been more delighted.

In future, buying shares in companies such as Dairy Farm Holdings (SGX: D01), DBS Group (SGX: D05) and Jardine Cycle & Carriage (SGX: J36) will no longer be a pipedream. Instead, adding those highly-priced shares to our portfolios could become a reality for everyone.

It is a great moment for the Singapore market; a great moment for Singapore investors and a great moment for Singapore companies.

I could barely contain my delight when I heard the news

10-minute fix

From the start of next year, investors should be able to buy stocks in blocks of 100 units rather than the current rule of 1,000 shares at a time.

However, my excitement was somewhat tempered when I saw that some financial pundits appeared to be more fixated by changes to the rules about contra trading. They, like the hapless chef, forgot to focus on the meat of the changes.

Currently, traders can buy and sell shares within a three-day window before they have to settle their accounts. Consequently, they could either get paid, if they should make a profit, or stump up the difference, if they suffer a loss from the trade.

The proposed changes to the contra-trading rules mean that the settlement window is set to be shortened from three days to just two. Additionally, the trades will need to be backed by adequate collateral.

I don’t know about you but I have no idea what I am going to be wearing in three days times, let alone try to second-guess what the stock market could do over the same period. But traders think they can.

Warren Buffett, one of the greatest investors of our lifetime, once said: “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”.

A golden opportunity

Peter Lynch, another hugely successful investor said: “Often there is no correlation between the success of a company’s operation and the success of its stock over a few months or even a few years”.

He went on to say: “In the long term, there is a 100% correlation between the success of the company and success of its stock.

Here at The Motley Fool Singapore, we don’t believe it is possible to time the market. So, we don’t even try. We do, however, believe in buying great companies to hold for the long term.

If you just think about it for a moment, you will know it makes perfect sense. For example, if an investment in, say, Singapore Exchange (SGX: S68) or Sembcorp Marine (SGX: S51) has increased seven-fold over the last decade, why on earth would you ever want to jump in and out of the shares.

The Monetary Authority of Singapore and the Singapore Exchange have provided all of us with a chance to, at last, buy shares that were at one time unattainable, unless you were very wealthy.

I don’t intend to miss this opportunity. I hope you won’t too.

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.