The Market’s Special Winners and a Story of Pain and Losses

Raffles Medical Group Limited (SGX: R01), Vicom Limited (SGX: V01), Straco Corporation Ltd (SGX: S85), and Riverstone Holdings Limited (SGX: AP4) can be considered to be special stocks in Singapore’s stock market.

Since the start of 2007, Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has lost 12% in price as of 5 February 2016. Losers in the market over that timeframe are not uncommon. In fact, nearly seven out of every 10 listed stocks in Singapore today that were also listed back then have seen their share prices fall by at least 10% in the same period.

That’s why the aforementioned quartet of Raffles Medical Group, Vicom, Straco, and Riverstone can be seen as special. In the past nine-plus years that have seen the Straits Times Index fall by 12%, these four stocks have seen their share prices climb by an average of 482%.

Company Price change: 1 Jan 2007 to 5 Feb 2016
Raffles Medical 373%
Vicom 380%
Straco 558%
Riverstone 616%
Average 482%

Source: S&P Global Market Intelligence

Now, looking at where they are today as compared to the start of 2007, it’s easy to imagine that the four big winners have given their investors an awesome time in the markets. But, that isn’t the whole truth. As a matter of fact, each of them have given their investors extremely trying times over the past nine-plus years.

This can be seen clearly in the chart below, which shows the biggest peak-to-trough loss that they have suffered in each calendar year from 2007 to 2015.

Annual maximum peak-to-trough loss for Raffles Medical, Vicom, Straco and Riverstone

Source: S&P Global Market Intelligence (click chart for larger image)

Some particularly bad cases were Raffles Medical and Straco’s peak-to-trough loss of over 60% in 2008 and Riverstone’s 26% and 30% decline in 2010 and 2011, respectively.

What we can gain from all these is a common story that takes place in the stock market: Long-term gains come with short-term pains, at times, really bad short-term pains. In the current market environment we’re in – one in which the Straits Times Index has fallen by nearly 30% since April 2015 – the story is really worth keeping in mind.

Wharton finance professor Jeremy Siegel once said that “Volatility scares enough people out of the market to generate superior returns for those who stay in.” We’re clearly in volatile times now. It’s understandable for you, as an investor, to feel pain and fear. But here’s a simple question for you: Do you want to be part of the crowd that gets scared out of the market, or the one that has the fortitude to stay in the game? I know my choice. Do you?

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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 Chong Ser Jing owns shares in Raffles Medical Group, Vicom, and Straco.