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Why You Shouldn’t Care About the Stock Market

I had just spent an extremely fulfilling weekend at the recently concluded Invest Fair 2015 in which The Motley Fool Singapore was a participant.

My colleague, David Kuo, was also a speaker and panelist at the two-day investing event, held in Suntec City Convention Centre, which drew in thousands of eager Singaporeans who were looking for ways to become a better custodian of their own investing capital.

Over the course of the two days at Invest Fair 2015, I had the opportunity and privilege to meet many members of MF550 and loyal long-time readers of the Fool. (Thank you all for turning up!)

In my conversations with them, one thing struck me: There were a good number of investors who expressed their concern that Singapore’s stock market had basically gone nowhere over the past few years.

Their concern is valid. Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI), closed at 2,940 points on 14 August 2010. Last Friday, which was 14 August 2015, the index was at 3,114, representing a gain of just 5.9% over exactly five years.

But, over that same period of time, there were also stocks which have been massive winners. Three that come to mind are Vicom Limited (SGX: V01), Raffles Medical Group Ltd (SGX: R01), and Straco Corporation Ltd (SGX: S85). As you can see in the table below, the trio has more than doubled in price.

Share price growth for Vicom, Raffles Medical, and Straco

Source: S&P Capital IQ

How did that happen? The table below, which plots their earnings per share (EPS) growth, can give us a good idea of how the three shares have managed to post solid gains despite what looks like a weak stock market on the surface.

EPS growth for Vicom, Raffles Medical, and Straco

Source: S&P Capital IQ

From 2009 to 2014, Vicom, Raffles Medical, and Straco have grown their EPS consistently (and considerably as well, in the case of Straco). This is a strong reminder of why investors shouldn’t worry or care about the stock market’s performance. Instead, the focus should be on the performance of an individual stock’s business.

As shown above, individual stocks can drastically outperform a weak market on the back of the strength of their businesses. The reverse is also true; an individual stock can (and many have!) significantly underperform a stagnant or rising market if its underlying business crumbles.

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 Vicom, Raffles Medical Group, and Straco Corporation