Year of the Goat: Industries to Love?

We’re fast approaching Chinese New Year, when the Year of the Horse would make way for the Year of the Goat.

In the weeks leading up to the festive occasion, it’s almost a given that well-meaning Feng Shui experts would also be out with their predictions for the year ahead.

And in case you’re wondering why I’m mentioning these, it’s because the future of the financial markets and the economy would also often be part of those predictions.

According to a master of the ancient art, the Metal industry can look forward to an excellent year ahead. Companies which belong to that industry include those related to banking, fortune telling, steel, vehicles, robotics, and machineries and equipment among others.

With that, it seems that investors in Oversea-Chinese Banking Corp Limited (SGX: O39), Jardine Cycle & Carriage Limited (SGX: C07), and HupSteel Limited (SGX: H73) may just have a good year to look forward to. After all, the trio are involved with banking, the distribution of automobiles, and steel production and trading respectively.

But, hold your horses here! Before you rush off to place some orders with your online brokerage account, there’re some important things to note.

In the previous Chinese New Year, companies that had businesses related to food & beverage, real estate, and agriculture were supposed to have a roaring year. But as it turns out, agricultural firms like the palm-oil producers Golden Agri-Resources Ltd (SGX: E5H), First Resources Ltd (SGX: EB5), and Mewah International Ltd (SGX: MV4) have all had a mixed-to-downright-bad year.

Share price history for palm oil producers

Source: S&P Capital IQ (the Year of the Horse started on 31 January 2014)

The experiences of the palm oil producers are admittedly a small sample – and I’m certainly not trying to ding any Feng Shui predictions here – but it serves to prove two points: (1) Depending on short-term predictions of any kind for your investing success can be a very tricky thing, and (2) the business performance of the shares matter.

With that, I’d like to conclude with the following thoughts that I first shared when I wrote about the supposedly “hot” industries for the Year of the Horse a year ago:

“[A]s investors, we shouldn’t miss the forest for the trees. Great long-term returns do not come from trying to pick good performers over the course of a year; it comes from patiently holding great businesses that go on to grow for the years and decades to come.”

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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 doesn't own shares in any companies mentioned.