Last year could have been a rewarding year for investors, if they had sunk their teeth – or should I say – sunk their FANGs into just four stocks. The four “FANGs” last year were Facebook, Amazon, Netflix and Google. Separately, they returned 34%, 117%, 134% and 45%, respectively. And there wasn’t even a single cent of dividends between them to speak of, to provide helpful kickers to their total returns. It was all about capital growth. Of course, Google was renamed and restructured as Alphabet in October 2015. But the acronym, FANA, not only sounds odd but it also…
Last year could have been a rewarding year for investors, if they had sunk their teeth – or should I say – sunk their FANGs into just four stocks.
The four “FANGs” last year were Facebook, Amazon, Netflix and Google. Separately, they returned 34%, 117%, 134% and 45%, respectively.
And there wasn’t even a single cent of dividends between them to speak of, to provide helpful kickers to their total returns. It was all about capital growth.
Of course, Google was renamed and restructured as Alphabet in October 2015. But the acronym, FANA, not only sounds odd but it also doesn’t have quite the same bite of excitement about it. So, FANG it is.
Not to be outdone by America, we can make up an acronym of our very own for Singapore stocks too. It is SCANT, which, unlike FANG, doesn’t sound very inspiring, at all.
Nevertheless, SATS (SGX: S58), ComfortDelGro (SGX: C52), Ascendas Hospitality Trust (SGX: Q1P), Neptune Orient Lines (SGX: N03) and Tiger Airways (SGX: J7X) have returned 30%, 21%, 17%, 46% and 55%, respectively. All or even just one of the SCANT stocks could have given many of our portfolios a useful boost last year.
To have done well last year, it would also have been a good idea to steer clear of businesses that dig, drill or pump things out of the ground. It was an awful year for the commodities industry.
Those were the two main themes for 2015. But what a difference a couple of weeks at the start of the year can make in the stock market.
No sooner had traders returned to their desks after the long festive break than stock markets around the world were plunged into chaos by some quite outrageous behaviour on the Shanghai bourse.
The turmoil was interrupted only by some well-meaning calming measures from Chinese regulators. But the good intentions of the regulators backfired.
It created more confusion than composure by locking investors into the market through safety measures known as circuit breakers.
The chaos in China mixed with some geopolitical hand-bagging between Saudi Arabia and Iran in the Middle East and some inexplicable fireworks in North Korea sent global markets into a tailspin.
The end is nigh
Some market commentators were quick to broadcast their hasty conclusions that the end of the world was nigh. Others were quick to blame the slowdown in China for just about every known ill in the world.
The collapse of the Chinese stock market, they reckon, was testament that the Chinese economy was on the edge of a precipice. When will they learn that the Chinese stock market has no bearing on, or connection with, the Chinese economy?
Simply saying it over and over doesn’t change anything. Nor does repeatedly telling everyone that China’s economy is slowing down.
We have known about China’s strategy to rebalance its economy for quite some time. Consequently, we should be applauding its efforts to manage a difficult but necessary economic transition.
So, China’s economy is growing, albeit at a slower rate than before. The US economy is also expanding, as are the Japanese, German, British and French economies.
Put all that together and we have half a dozen of the largest economies in the world slowly moving in the right direction.
Those are six good reasons to be confident.
So the next time the market throws a wobbly, try to look through and beyond the volatility. Focus on the things that matter rather that the things that some people – who like to march to the tune of a different drummer – would like you to worry about.
Warren Buffett once said: “Volatility is a symptom that people have no idea of the underlying value.” How true!
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.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.