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Where To Find Hidden Gems

What types of restaurants are you most likely to find in Singapore’s Little India?

The obvious answer would be eateries whose cuisines are closely associated with the Indian subcontinent.

Guess what?

But what if I told you that there is a restaurant that serves quality provincial French fare, right in the heart of Little India. It seems a little implausible. But there really is.

Truth is we are conditioned to think along straight lines. So we assume, whether rightly or wrongly, that anything that is associated with Little India must have to be Indian in origin. But we couldn’t be more wrong.

The same goes for investing. We tend to think of stock-market investing in straight lines too.

To the uninitiated, the Singapore market tends to be associated with dividend-paying property outfits, financial institutions, marine businesses and perhaps retailers and restaurants plus the almost-obligatory telecom companies.

There is some grain of truth in that.

Beneath the surface

The Straits Times Index (SGX: ^STI) is home to three banks, namely, DBS Group (SGX: D01), UOB (SGX: U11) and OCBC (SGX: O39). It is also home to a brace of telecom operators, namely Singtel (SGX: Z74) and StarHub (SGX: CC3), four businesses that are associated with the shipping sector and no less than seven companies linked to property.

That would be in keeping with the commonly-held view of the Singapore stock market.

But lurking beneath the surface is a host of businesses of varying sizes – some of which would blow our socks off.

To unearth those companies takes time and effort, though. Or as Peter Lynch once said: “There are always pleasant surprises to be found in the stock market – companies whose achievements are being overlooked.

But trawling through Singapore’s 700 or so companies to hunt for unnoticed companies can be time-consuming.

It is even more onerous if we want to do it properly.

Nobody knows

However, to make money from shares, we have to find something that nobody else knows. We also have to do something that others won’t do because they tend to think only in straight lines. That also takes time.

Thing is, stock picking goes further than simply sitting at our desks and sifting through company reports and building spreadsheets. It also involves a lot of legwork and shoe leather.

That part of my stock picking technique has not changed in the last couple of decades. It doubt if it ever will.

Something else

There is something else about our blinkered view of the stock market.

Many of us feel great when the market goes up a couple of hundred points. We also feel terrible when it drops a couple of hundred points. Go on, admit it.

But we here at the Motley Fool see corrections not as a disaster but as an opportunity to buy shares in those companies that we have researched carefully, when prices are favourable.

As far as we are concerned, our investing edge is not something that happens by chance. It comes from buying shares in the companies that we already understand, at attractive prices.

The secret to successful investing is to be prepared. That is half the battle. The other important part is being brave when others are fearful.

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.

Written by David Kuo, Take Stock - Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

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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 Director David Kuo doesn’t own shares in any companies mentioned.