Investing Advice For The Star Wars Fan

Credit: Kory Westerhold

The much-anticipated Star Wars: Episode VII teaser trailer was released over the last weekend. It quickly garnered views from its legion of fans, clocking up almost 40 million views on Youtube in the last four days. Needless to say, the Star Wars franchise still remains stunningly popular.

We may even have some Foolish Star Wars fans in the midst.

So, in the spirit of the Motley Fool’s goal to educate, amuse and enrich, I present to you three timeless quotes from Jedi master Yoda which are good for both the Jedi knights and investors.

“Judge me by my size, do you?”

The best performing companies in the Singapore share market might not come from the blue chip companies alone. Ask Warren Buffett. Even he wishes that he had the advantage of buying smaller companies.

At the local front, the best companies in the last decade came from companies with smaller market capitalizations such as oil and gas services provider MTQ Corporation Limited (SGX: M05) and test and inspection outfit VICOM Limited (SGX: V01). A durable competitive advantage for a business might not come from size alone. It can come from a company’s competitive position within its own industry. In this instance, VICOM is practically the only vehicle test and inspection unit within Singapore.

“Adventure. Excitement. A Jedi craves not these things.”

Jumping in and out of shares may sound adventurous and exciting, but it is rarely profitable for the private investor. If you crave excitement and adventure, take a roller coaster ride instead. The path to long term investing success is to trade as little as possible. In fact, the act of investing should be as boring as possible. Your job as an investor would be to find the best companies you can, and give their management teams time to do their best work.

So fret not, young padawan, if you can wait long enough for your companies to appreciate, you may find that the multi-bagging returns to be exciting.

“Do. Or do not. There is no try.”

There is no substitute to experiencing the share market for real to learn about your risk tolerance. Fear is a strong emotion to overcome when it comes to investing. Every individual has unique in their perception of risk. It’s only by owning shares will you find out how you will behave during market downturns and so forth. If you know where you stand with risk, then you can begin to deal to it.

Foolish take away

So, awaken the Force within you. Your advantage as the small investor to eschew the need for short term results has the potential to bring home great long term results. Following the three pieces of sage advice from Jedi Master Yoda may help you on the way to beating the Straits Times Index (SGX: ^STI).

Or in Yoda-speak: listen to Yoda, you must. Better investor, you will be.

Learn more Yoda-like advice through a FREE subscription to Take Stock Singapore. Sign up here to The Motley Fool's weekly investing newsletter that will teach you how to GROW your wealth in the years ahead.

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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 contributor Chin Hui Leong doesn’t own shares in any companies mentioned.