725 Reasons To Be Selective When Investing

I remember when I first started investing, I was given a “tip” by a bank relationship manager. She said a client of hers had made a huge return investing in a company. She then confessed to me that she had never heard of the company before but that she was convinced of the firm’s potential when her client showed her a newspaper clipping about it.

The company in question is palm oil and sugar producer Wilmar International Limited (SGX: F34), one of the largest listed companies in Singapore today and a constituent of the Straits Times Index (SGX: ^STI).

Although I was very new to investing at that time, I did know that Wilmar International was not an insignificant and small company which many investors might not have heard about. After all, Wilmar already had US$4.65 billion in annual revenue even all the way back in 2005 (Wilmar’s annual revenue has grown by nearly nine-fold since to US$40.1 billion over the last 12 months).

Therefore, I was extremely surprised that the bank employee, who at that time had already been advising clients on investing matters for more than 20 years, had not heard of the company and was sharing this “tip” with me only after a client had told her about it.

However, over the years, I realized that the bank manager’s reaction and level of knowledge about the stock market is actually quite common. Many people I’ve met over the years had invested in things merely because a friend or a financial adviser had shared ideas with them. To those folks I had met,  that one company or investment idea might be the only opportunity they know about.

But, there are plenty of reasons to be selective when it comes to investing in the stock market. In fact, there are 725 reasons to be exact. According to bourse operator Singapore Exchange’s Stock Facts screener,  there are 725 entities listed on the exchange available for investors to invest in.

And, that pool will grow as and when initial public offerings (IPOs) occur in Singapore’s stock market.

So, with 725 choices in the Singapore stock market alone when it comes to making an investment, I trust it’s easy to see that as investors, we are not restricted by the number of opportunities available out there in the market. Instead, we are actually restricted by the amount of funds we have available to invest.

Thus, if you know for a fact that you have a limited amount to invest but unlimited (as more and more companies will be listed in the future) choices to invest in, would you not be more selective about where you decide to put your money in?

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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 Stanley Lim owns shares in Wilmar International.