Investing Is Never A Smooth Ride

The Straits Times Index (SGX: ^STI) has already dropped by 11% since the beginning of the year – and we have not even reached the end of January 2016, yet.

The stock market has been very volatile of late. But here’s the thing,  investing is never a smooth ride.

Current constituents of the Straits Times Index such as Singapore Telecommunications Limited (SGX: Z74), Singapore Exchange Limited (SGX: S68), Keppel Corporation Limited (SGX: BN4), Oversea-Chinese Banking Corp Limited (SGX: O39), and Sembcorp Industries Limited (SGX: U06) can make for great examples.

Let’s go back 15 years in time to 26 January 2001. If we had invested in those five companies – some of the biggest companies in Singapore even back then – at that time and simply hung on till today, we’d be very happy investors. Here are how the gains will look like:

Company Dividend Reinvested Return (from 26 Jan 2001 to 26 Jan 2016)
Singapore Telecommunications 144%
Singapore Exchange 1,266%
Keppel Corporation 711%
OCBC 163%
SembCorp Industries 126%

Source: S&P Capital IQ

Let it be known that over the course of the 15 years seen in the table above, each company had seen their share prices fluctuate wildly over the short-term.

In fact, all five had dropped by more than 50% from peak-to-trough during the Global Financial Crisis of 2008-09. Moreover, Keppel Corporation and Sembcorp Industries – as a result of their wide exposure to the oil & gas sector – have seen their shares decline by nearly 60% since the start of 2014 due to the current oil price collapse.

But, as the table illustrates clearly, if we had held on to each stock since January 2001, we would have at least doubled our investment in every one of them. Stocks never go up in a straight line.

Investing is about charting a long-term path and staying the course. Unfortunately, staying the course and doing nothing is perhaps the most difficult thing to achieve in investing because the journey is never smooth. But for those with the patience and fortitude, the rewards can be great.

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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 Keppel Corporation.