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11 Things You Have To Know About Singapore’s Stock Market

In May this year, I had the idea to collect important historical data about Singapore’s stock market and present them in a single article.

The usefulness of stock market history has its limits, obviously. Warren Buffett once said that “If past history was all there was to the game, the richest people would be librarians.”

But, knowing history is still very important as it can give us crucial context to interpret and understand whatever may happen to stocks here in the future. For example, “People would be less scared of volatility if they knew how common it was,” my colleague Morgan Housel once wrote.

The idea in my head eventually became an article I published on 29 May 2015 that’s titled 6 Things You Have To Know About Singapore’s Stock Market.

In the article, I mentioned that it is a work in progress – I’d add to it whenever I uncover new facts and information. Since the piece was first published, I’ve made four updates to it to bring the fact-count to 10 (see here, here, here, and here for all the updates). Here’s the 11th.

11. The stock market’s big long-term winners can be way more volatile over the short-term when compared to the market-average.

We can illustrate this with historical data from healthcare services provider Raffles Medical Group Ltd (SGX: R01), tourism asset owner Straco Corporation Ltd (SGX: S85), and Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Raffles Medical, Straco, and Straits Times Index's volatility table

Source: S&P Capital IQ; author’s calculations

The table above (click for larger image) shows the number of days in which the three stocks have suffered daily losses of 2% or more. As you can tell, two-percent-loss-days appear much more frequently for Raffles Medical and Straco as compared to the Straits Times Index.

For the period we’re looking at (30 November 2005 to 26 November 2015), the Straits Times Index has fallen by 2% or more in 98 days over a total of 2,518 – that’s just 3.9% of the time. Meanwhile, Raffles Medical and Straco have had two-percent-loss-days occur in, respectively, 7.6% and 14.3% of their total trading days.

From 30 November 2005 to 26 November 2015, Raffles Medical and Straco’s shares have gained 659% and 567% in price alone. Over the same period, the Straits Times Index has climbed by just 25%.

Given what we’ve seen above, stocks with great long-term returns can come with above-average short-term volatility. In other words, short-term pain can at times be the price we have to pay to enjoy big long-term gains. That’s important to keep in mind for investors of all stripes.

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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 Raffles Medical Group and Straco Corporation.