1 Surprising Thing You Have To Know About The Stock Market’s Best Winners

Tourism asset owner Straco Corporation Ltd (SGX: S85) and healthcare services provider Raffles Medical Group Ltd (SGX: R01) have been massive long-term winners in Singapore’s stock market.

Over the past 10 years since 10 June 2005, Straco and Raffles Medical have seen their share prices soar by 644% and 903% respectively. In comparison, Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has gained just 50% over the same time period.

But, did you know that both companies could surprisingly have been viewed as complete losers multiple times over the past decade for investors who had a short time horizon? Consider this:

  • Since 10 June 2015, Straco’s shares have closed down 3% for 34 days; meanwhile Raffles Medical’s shares have done the same for 75 days.
  • From 2005 to 2014, Straco has seen painful annual peak-to-trough declines of more than 15% for nine of those 10 years; for Raffles Medical, the figure’s at six years. For details, check out the table below:
    Straco and RMG peak-to-trough decline (1)
    Source: S&P Capital IQ; author’s calculations

All these makes something clear: It’s easy for investors to truly miss the forest for the trees if they’ve a myopic focus on the short-term.

Straco and Raffles Medical have both seen their profits jump manifold over the past decade from 2005 to 2014 (Straco’s profits are up by 1,167%; Raffles Medical’s earnings have climbed by 465%) and that’s been a key driver for their impressive market-beating returns.

This also goes to show that whatever happens to a stock with a growing business in any given day or even any single year often becomes utterly insignificant if we’re seeing things through the lens of long-term investing. Don’t believe me? Try picking out the moments when Straco had lost 35% in 2011 or 20% in 2013 in the chart below.

Straco share price chart, January 2010 to June 2015

Source: S&P Capital IQ

I can’t – and that’s the point.

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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 owns shares in Straco Corporation and Raffles Medical Group.