The Best Place To Find Winning Stocks

Does anyone have a Panadol handy? I feel a migraine coming on.

You see, I get this nagging pain that starts at the back of my neck, whenever I hear market commentators talk through their hat.

Oil trouble

Some of you may remember the abrupt drop in oil prices towards the end of 2014. They fell from around US$100 a barrel to less than half that in the space of four short months.

It sent market pundits into overdrive.

They were forecasting doom and gloom because falling oil prices was supposed to indicate a drastic slowdown for global economies, starting with China.

I kid you not. It was supposed to have severe ramifications for all of us. So guess what?

Global equity markets went into a tailspin. Singapore stocks slid from around 3,350 points to 3,150 points.

But that is not quite the end of story, yet.

And there’s more…

Low oil prices were also supposed to be the new norm. Some were even forecasting oil prices as low as $20 a barrel. We were also told to expect prices to stay low for some time.

So where exactly are we now?

Rather than slumping to US$20 a barrel, the price of a barrel of oil has climbed back above US$60, for a variety of reasons.

But the pundits were not about to be silenced.

Just make it up as you go

Just as the slide in oil prices was meant to be awful, it seems that rising prices is now going to be just as dreadful. You really can’t make this stuff up, if you tried.

Apparently, high oil prices would burden companies with extra costs. It would crimp bottom-line profits; it would dampen consumer spending.

So, it appears that a low oil price is not good. And neither are high oil prices.

Admittedly fluctuating oil prices can be irritating. But that is part and parcel of investing. If it wasn’t the price of a barrel of crude, then it would probably be something else that would upset stock markets traders.

We love to worry

In times like this (and any other) it is important to focus on the long term. Markets are never quite as efficient, as we would like to think.

Warren Buffett once said: “I’d be a bum on the street with a tin cup if the markets were always efficient”.

In fact, times of uncertainty can be some of the best moments for us long-term investors to pick up stocks at bargain prices. It can provide level-headed thinkers with opportunities, while others are losing theirs.

Begin by asking if a company that you are interested in is likely to be bigger in five or ten year’s times.

It doesn’t matter if the company is a conglomerate such as Keppel Corporation (SGX: BN4), a midcap healthcare provider such as Raffles Medical (SGX: R01) or a small-cap supermarket such as Sheng Siong (SGX: OV8).

It could even be company that is listed on the Catalist market, such as curry-puff maker Old Chang Kee (SGX: 5ML).

Start here

That should be your starting point before you even begin to filter, screen, sift, sieve or whatever else you do to find stocks to invest in.

Peter Lynch once said: “Stock picking can’t be reduced to a simple formula or a recipe that guarantees success if strictly adhered to.

So put away your mouse, step out from behind your desk and put on your walking shoes.

My best investing ideas have come from just walking around town and keeping my eyes open. It could be yours too.

A version of this article first appeared in Take Stock Singapore. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter.

Written by David Kuo, Take Stock - Singapore tells you exactly what's happening in today's markets, and shows how you can 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 Director David Kuo doesn’t own shares in any companies mentioned.