3 Key Investing Lessons for 2015

The current year is winding down.

It may be a good time to reflect on the happenings in world of finance in 2015 and pick out lessons that we can take away from them. There have been a few notable events this year, like the fall in oil prices and the depreciation of the Chinese yuan. Coming to home, Singapore’s market barometer, the Straits Times Index (SGX: ^STI), is currently around 16% lower compared to the end of 2014.

Here are three lessons that we can learn in 2015:

1. The oil and gas massacreclick here

2. The value of accumulated knowledgeclick here

3. The best investing opportunities may be sitting right in front of you

The best performing U.S. stocks in my stock portfolio year to date are Netflix Inc and Activision Blizzard Inc. The trio are up by 151%, 117%, and 95% respectively. In comparison, the US-based market barometer, the S&P 500, is up a mere 0.7% compared to the end of 2014.

What’s interesting is that the three companies above are neither obscure nor hidden in some way.

Local telco Starhub Ltd (SGX: CC3) is in commercial discussions with Netflix to bring its service into Singapore.

Meanwhile, the consumer’s dollars are flowing into online shopping where Amazon holds a strong position.

Elsewhere, Activision Blizzard has acquired King Digital Entertainment PLC, the maker of the popular Candy Crush mobile game. Activision Blizzard is also the home of valuable computer and video gaming franchises like World of WarcraftCall of Duty and Skylanders.

To be sure, the returns of the aforementioned trio are not one-off gains either. I have held the three companies for at least five years. The table below summarizes the performance of Netflix, Amazon, and Activision Blizzard since my initial purchases:

Netflix, Activision, Amazon prce table.
Source: Google Finance; author’s calculations

So, what’s the lesson here?

There are many ways to invest. Some may prefer to seek in obscure areas for a bargain stock. On the flipside, as the companies above have shown, there may be bargains sitting right in front of us. The best stock idea could be something we, as consumers, enjoy using.

There’s another learning point and it is related to something Peter Lynch once said: The best stock to buy may be the one which you already own. It’s a pity that I did not add to Netflix, Activision Blizzard, or Amazon in the whole of 2015. So as you can see from my admittedly limited sample, there’s truth in Lynch’s words .

Foolish takeaway

Learning lessons helps us improve our investment process.

In my view, a good investment process involves:

  • Thinking about the potential upside as well as potential downside of a company. In our case, the oil and gas massacre helps us think through the potential downsides of a cyclical industry.
  • The use of accumulated knowledge over the long-term to our advantage.
  • The recognition that the best investing opportunities may be sitting right in front of us.

Picking up lessons like these helps us sharpen our investment thought-process and hopefully, become better investors.

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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 contributor Chin Hui Leong owns shares in Netflix Inc, Inc and Activision Inc.