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Investing Tips From A Singapore Taxi Driver

I never in my wildest dreams expected to be able to hail a cab during one of those sudden rainstorms that we experience in Singapore during the monsoon season.

I was half expecting to have to hunker down in the taxi stand for at least a couple of hours, until the rain abated. I even considered making myself a quick pork-floss sandwich, using the provisions that I had just bought from the grocers….

….when, out of the blue, arrived the welcome sight of a Trans-Cab, liveried in bright red. Red, suddenly, became my favourite colour.

Never was I more delighted, as I thanked the driver profusely for braving the torrential downpour.

Dreadful conditions

Wow! You must be one of only a handful of drivers that would dare to drive in these dreadful weather conditions”, I said to him.

Most of your colleagues are parked by the roadside, savouring a cup of kopi, as soon as the first drop of rain hits their windscreens”, I added.

Well, you have to be brave when other taxi drivers are fearful”, he replied with a cheesy grin and a knowing glint in his eye. For a split second I thought Warren Buffett was behind the steering wheel of my taxi. But that, of course, would be ridiculous.

He went on to say that rainy days are some of his most lucrative shifts.

Sunshine and rain

He explained that when the sun is shining, there are more taxis on the road than there are customers. But when it pours, it is his chance to make money in double-quick time.

I can make lots of money when it rains – the heavier and the longer it rains, the more I can make”, he quipped. “But you have to be careful”, he added.

There is a lesson in there for all of us, especially when it comes to investing.

The market at the moment is experiencing one of those torrential downpours. The ones that can prompt many traders and investors to run for cover.

But those are precisely the times when we should be looking for bargains. And not just looking for them – we should be snapping them up too.

Excellent times

Warren Buffett once said: “Excellent investment opportunities come about when superior businesses experience a one-time event that depresses the stock price in relation to its intrinsic value.

He also said: “The future is never clear. You pay a very high price in the stock market for a cheery consensus. Uncertainty is the friend of the buyer of long-term values.

Right now, the market is taking a very dim view of just about everything. If you can name it, they will almost certainly take a dim view of it.

They don’t like the idea of a hike in US interest rates – they think it is bad for any company with debt. So out of the window goes Real Estate Investment Trusts such as Suntec REIT (SGX: T82U). They don’t go a whole bunch on low oil prices either, so anything that is related to oil, such as Sembcorp Marine (SGX: S51) is in the doghouse too.

They are concerned about terrorism, cybercrime and geopolitical issues. Additionally, they are not enamoured by emerging markets, which explains why Jardine Cycle & Carriage (SGX: C07) has fallen out of favour. They fret over the US Presidential Election; they frown over Japan’s slow economic recovery and grimace over news that China’s economy is not expanding nearly as quickly as it used to.

But one thing is for certain. The time to buy stocks is when pessimism is rife.

In times like this, buyers are few and far between, which is precisely the time that we can give our investments a welcome boost by buying stocks at bargain prices.

But be careful. Not everything that is cheap could be a bargain. Cheap rubbish is still rubbish.

So look for those wonderful companies that are selling at fair prices, rather than fair companies that are on offer at wonderful prices. And remember the key to making money from shares is not to let anyone scare you out of them. Just like my cab driver.

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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