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Why Saying NO to A Mountain of Investment Ideas Might Get You to a YES

Today’s investor can pretty much invest in any part of the world.

Said another way, there are more investment ideas than ever before that are competing for our attention.

Investment ideas can come in all shapes and sizes. For instance, in the Singapore telco industry alone, Singapore Telecommunications Limited (SGX: Z74) represents a very different business compared to M1 Ltd (SGX: B2F) and StarHub Ltd (SGX: CC3). The former derives the majority of its business from overseas, while the latter duo make almost all their dough within the shores of Singapore.

With the avalanche of investment ideas, how we deal with the flow can make a big difference to our results.

The Art of Saying NO

Ariel Investment’s chief investment officer Rupal J. Bhansali explained her firm’s approach to sieving out the best ideas in the snippet below:

“Our approach is the opposite. We screen out ideas. We sort of say let’s reject. We don’t accept. Psychologically that creates a notion of the idea must compete for our attention because we tell the idea, you don’t quite stack up. You’re not good enough for us. Now, tell us why you are.

From the very get-go in our investment approach, we are trying to eliminate rather than select. That’s the beginning.”

Interestingly, Bhansali believes that investors might do better if they screen out ideas, rather than to screen for ideas. She might not be alone in this train of thought. The legendary manager of the Fidelity Magellan fund, Peter Lynch, once said:

“The person that turns over the most rocks wins the game. And that’s always been my philosophy.”

In essence, when we look for investment ideas, we have to be willing to say NO to a lot of ideas in order to whittle down to a few that we can say YES to. Or in Lynch’s parlance, investors might have to get used to turning over more rocks.

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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 contributor Chin Hui Leong doesn’t own shares in any companies mentioned.