Wise investors let compounding work its magic

[funman168]

Yes, it really works. I started at age 16 with only $1k. It had balloon more than 1000 times to date

[shanrui_91]

you can't go bankrupt investing in equities unless you went on a speculative spree with high leverage.

http://www.joshuakennon.com/eastman-kodak-example/

Not even if the blue-chip company collapsed decades later

[yeokiwi]

you can't go bankrupt investing in equities unless you went on a speculative spree with high leverage.

http://www.joshuakennon.com/eastman-kodak-example/

Not even if the blue-chip company collapsed decades later

It looked great on paper except that the S&P 500 was around 250 in 1986.
$100k in 1986 in S&P 500 is worth $600k now. With dividend reinvested, it will be $1200k or an annualized return about 10%.

It was the positive macroeconomic factors in the earlier years that gave the investors a reasonable good return despite the failing of Kodak and Kodak was a global blue chip company in the 80s and 90s.

I do not think any of the blue chips in Singapore actually qualified to be a global blue chip company.

Look at some of the japanese blue chips.
I think the lesson in Kodak does not apply to them.

Hitachi Zosen Corp (7004.T)
http://www.reuters.com/finance/stocks/ch...bol=7004.T

Sumitomo Corp
http://www.reuters.com/finance/stocks/ch...bol=8053.T

Nomura Holdings Inc
http://www.reuters.com/finance/stocks/ch...bol=8604.T

Panasonic Corp (6752.T)
http://www.reuters.com/finance/stocks/ch...bol=6752.T

Mizuho Financial Group
http://www.reuters.com/finance/stocks/ch...bol=8411.T

NTT Docomo Inc(Market capitalisation of S$80 billion!, I do not think there is any blue chip in Singapore that has anything close to this figure)
http://www.reuters.com/finance/stocks/ch...bol=9437.T

Dividend not included. But even if it is included, I think it should not be any prettier.
Most of the data started at 1993 and if the 1990 peak was in the data, the return will be even uglier.

[VIChris]

Hi yeokiwi,
trying to understand what is your definition of global blue chip? Thanks!

[yeokiwi]

Hi yeokiwi,
trying to understand what is your definition of global blue chip? Thanks!

In my opinion, Kodak is a global company that sold products all over the world, good profit margin and a big world market share(90% in the 60s).
We have blue chips in Singapore but many of the blue chips are highly dependent on Singapore economy. If Singapore tanks, they tank.

[VIChris]

Thanks for your reply. To further discuss on this topic, I've another question, do you think companies like Keppel Corp, SemCorp Marine, Jardine, Capitaland is dependent on S'pore economy?

Cheers!

[pianist]

if anyone bought any blue chips 20yrs ago n purely do compoundations on dividends n suscribe to scrip dividends, N nothing more, its very hard to believe anyone could not make money, let alone lose money, much let alone go bankrupt.
anyone got a different view?

The Japanese "buy blue chips and hold" investors in the 1990 would think very differently.
They will not go bankrupt though.

that was the period of the 'lost' decade'

[godjira1]

Thanks for your reply. To further discuss on this topic, I've another question, do you think companies like Keppel Corp, SemCorp Marine, Jardine, Capitaland is dependent on S'pore economy?

Cheers!

Hiya. All of those mentioned have significant exposure to singapore still but also have sizable overseas operations. So i think the answer to yout question is probably yes, but not 100pct so.

Keppelcorp from my memory has reasonably high gearing which gives it additional juice on returns on capital. Assuming singapore inc maintains its good reputation that should continue but in this respect it has perhaps a bit more tail risk compared to the rest.

[Temperament]

Not one investment in the stock market is guaranteed or 100% to make money just because of time factor. Not even buying an Index Fund. Maybe some hard assets will keep up with inflation, at least.

[VIChris]

Keppelcorp from my memory has reasonably high gearing which gives it additional juice on returns on capital. Assuming singapore inc maintains its good reputation that should continue but in this respect it has perhaps a bit more tail risk compared to the rest.

Do take a look at Keppel Corp Quarterly report, their gearing is considered not high. Not even mentioning their O&M sector which has book order of almost historically high, over SGD 10B. Their property arm with more of SEA and North Asia exposure is doing well as well, I will not touch on their other subsidiaries.

What you said is true for Keppel Corp, they have somewhat will be affected by SG economy but the impact is getting lesser and lesser as they are becoming more global day by day. They are the world number 1 rig builder.

As for Sem Corp Marine, they are a pure marine play company with their exposure in SG insignificant except for the impact on government policies in support of maritime industry. They are the world number 2 rig builder with global business interest.

Well for the rest of the mentioned companies, I would suppose those interested could do some details research.

My 2 cents.

Cheers!