LONG TERM INVESTING CONCEPT BY WARREN BUFFETT;

I start with Buffett’s well-known saying: “Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time." 

                                                  

Warren Buffett is probably one of the best investors in the world.  One of the key reason for Buffett's incredible return in the stock market is his Patience. He is well-known for holding his stocks for the long-term. In fact, his favorite holding period in stocks is “forever”.  Stock Tips

From 1965 to 2017, annual returns of around 19% for his company’s shareholders was generated by Buffett. If you had invested just $1,000 in his firm, you would be sitting on a cool $8.9 million by 2017.

Yes, Buffett has sold shares often, but it is the thinking behind his quote that matters. If you have a long time horizon when investing, you will focus on the things that matter (hint: stock prices are not one of them) and will not bother with the things that don’t. STOCK INVESTMENT

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For any business to do well, it requires a considerable amount of time. By focusing on the long-term, we are forced to think about the quality and fundamentals of the company we are investing in. If we have an “investing” time frame of just one month, we would only be looking at stock price fluctuations alone, and it turns the damage to our portfolio. The daily fluctuation in stock prices will not do any good for our psychological health as well.

However, if our investing time frame is measured in decades or even generations, we will be forced to think about the things that matter: The long-term prospects of a business; the leaders behind a company; and the value of a business. Singapore Stock Blog

we want to invest in companies that have products or services in the next few years that will not become outdated  – ideally, we want companies with businesses that can succeed. Moreover, when we invest in the long-term, the probability of suffering losses will be much lower. 

iFAST & RAFFLES HAVE SHORT TERM PAIN BUT FOR LONG TERM GAIN

Today iFAST Corporation Ltd (SGX: AIY) and Raffles Medical Group Ltd (SGX: BSL) these 2 stocks have seen fallen hard from their peaks, but these two companies could still be great investments in the upcoming years.  let's see-  Share Investment

Company 1: iFAST

The chairman and chief executive of iFAST are Lim Chung Chun. It is an Internet-based investment products distribution platform that provides a comprehensive range of investment products and services to both corporate clients and retail investors. 

In May 2015 iFAST's shares are exchanging hands at S$1.06 apiece, which seen 32% down from a peak of S$ 1.565.

iFAST’s China operations posted a loss in 2017, just like in 2016. However, the company’s business in China is still in its early days as it was launched only in 2016. It will take time for iFAST’s operations in the country to stabilize.  Stock Market News Today

Lim Chung Chun said the following in the company’s 2017 annual report:

China is expected to be the biggest wealth management market in Asia, and it is a market that we should not ignore. Some shareholders have been concerned about the operating losses that we are currently incurring for China. We see this initial phase as an important investment for the long run. iFAST expects losses from China in 2018, and for the losses to be comparable to that in 2017. In the coming years, iFAST thinks that China can be an important contributor to its overall business.  Penny Stock Singapore

Company 2: Raffles Medical

Raffles Medical,  Established in 1976 is one of the largest private healthcare groups in Singapore. It also operates with 12 cities across Singapore, China, Japan, Vietnam, and Cambodia.

In recent time the company’s stock has not been doing well. One of the main reasons for this poor performance is that Raffles Medical’s business growth has slowed down tremendously. From the time high of S$1.675 seen in May 2016, Raffles Medical’s shares are changing hands at S$1.02 each now – that’s a fall of nearly 40%.

From 2014 to 2017, the company’s earnings per share came in at around 4.0 Singapore cents in each year. The market may also be worried about the start-up losses that the company is going to suffer when it opens its new hospitals in China.  Stock Reccomendation

However, it is the China hospitals that I feel will fuel growth for Raffles Medical over the long run. The private healthcare services provider is developing a 400-bed international general hospital in Shanghai, and a 700-bed international tertiary general hospital in Chongqing. The hospitals are scheduled to open in the second half of 2019, and the fourth quarter of 2018, respectively. Yes, start-up losses will be incurred. But if investors have a long-term mindset, the losses are necessary to position the company for future growth. In other words, this is some short-term pain for long-term gains.   Singapore Stocks To Buy

To give context for the potential that Raffles Medical has in Shanghai and Chongqing, Singapore’s population was just 5.5 million in 2015 whereas the two Chinese cities had populations of 30.2 million and 24.2 million, respectively. The sheer size of the market in China should ensure that Raffles Medical does not stay anemic for long.

Is this a right time to evaluate Singapore stocks for trading Opportunity?

Cheaper or Expensive?

A stock market is “cheap” or “expensive” depends on its valuation. 

Valuation is calculated by the price-to-earnings (P/E) ratio. For an individual stock, computing the P/E ratio involves dividing a company’s share price by its earnings per share. Singapore Stock Blog

There are two methods to simplify our investing decision in getting a better decision or finding which one is cheaper or expensive:

1. To compare the market’s current price-to-earnings (PE) ratio to the market’s long-term average PE ratio.

2. To determine the number of net-net stocks in the market.

Stock Market News Today

First Method: In this method, we have to current PE ratio with long-term average PE ratio. The local stock market can be represented by the Straits Times Index (SGX: ^STI). It consists of the 30 biggest stocks in Singapore. Since it is difficult to get the past daily PE ratios of the index. On14 May 2018, the SPDR STI ETF had found a PE ratio of 11.6. The long-term average & STI’s average PE ratio from 1973 to 2010 was 16.9 and hit 35 as a high PE  ratio and a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times its trailing earnings.

Based on the data, it is realistic to say that stocks in Singapore are cheaper than average now. Stock recommendation

Second Method: In this method, we measure the number of net-net stocks available in the local market because market capitalization of this stock is lower than its net current value. And it is calculated by using this formula:

Net current asset value = Total current assets – Total liabilities

It is an appropriate theory as investors can get a discount on the company’s current assets, such as cash, after clearing off all liabilities. 

If a large number of net-net stocks than usual can be found in a stock market at a certain point in time, then stocks would be cheapest at that moment. Stock Tips

Stock Research Singapore

From the above chart, we can observe an inverse relationship - when the STI is at a peak, the net-net stock count is low, and when the STI is at a low, the net-net stock count is high. we noted some points from the finding of the graph;

1. Firstly, we saw the net-net stock count fall to a low of below 50 for second-half of 2007 when the STI reached a peak before the Great Financial Crisis struck.

2. Secondly, we saw when the net-net stock count hit a high of nearly 200 in first-half of 2009 and it was during this time that the STI reached its bottom during the crisis.