MENU

“Did I Just Miss the Bull Run?”

What a difference a month makes.

Singapore’s market barometer, the Straits Times Index (SGX: ^STI), had fluttered right off the gate in 2016. From a level of 2882 points at the end of 2015, the index had hit a low of 2,538 on 11 February 2016.

But from there, the index then decided to do an about-turn to race up by nearly 12% to 2,837 from the aforementioned low. There are companies that have done even better.

Instant coffee maker Super Group Ltd (SGX: S10) is up 44% since 11 February 2016. Diamond manufacturing systems provider Sarine Technologies Ltd (SGX: U77) also rode the wave up with a 20% gain in the same period. Even the troubled oil & gas and property giant Keppel Corporation Limited (SGX: BN4) got into the act, seeing its shares rise over 28%.

The strong upward momentum seen in the market bellwether and many other individual stocks may prompt some to see this as a start of “bull run.” But as Foolish investors, we may want to look beyond the short-term movements for a better read of the situation.

Swinging in and out

The quick rise in stocks thus far is a timely reminder that trying to time your entry into the stock market may well be a fool’s (small f) errand.

If we choose to time the market, we have to constantly second guess the stock market’s erratic behaviour. It would be akin to trying to guess the collective emotional mood of a crowd of people you have never met. Even good fortune may not help you often enough to do that.

Furthermore, my colleague Chong Ser Jing had pointed out that missing a few of the best days in the market can have severe consequences for your returns:

“Between 1 May 1992 and 18 December 2013 (the timespan I had tracked), the Straits Times Index had earned an average of 3.48% per annum; if an investor had missed [the index’s] 10 best days, his returns would become almost non-existent at 0.12%.”

To be sure, I have no clue whether the current gains in the market will turn out to be a sustained bull run or just a brief interlude before prices fall yet again. As an investor for the long run, I prefer to spend my time somewhere else and that is, the study of the underlying business of a stock.

Foolish takeaway

I don’t think there are clues that can tell us when stocks will rise or fall over the short-term.

As such, our time may be better served in understanding the performance of the business behind the ticker. In my opinion, if a company’s fundamentals keep improving, history tells us that the stock price will eventually follow. That is also where the tenacious will to hold stocks of good businesses for the long haul come into play.

Over time, I submit, this would make a pleasing mockery of any short-term concerns we might have of missing a “bull run.”

For more investing insights and to keep up to date on the latest financial and stock market news, sign up for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Super Group.