Let’s be honest. Most investors think they can predict the future. Else, how do you explain the fact that most people hold fewer than ten stocks in their portfolio? The standard reply that it’s expensive to buy a diversified portfolio doesn’t cut – there is such a thing as exchange traded funds! On the SGX for example, there is the SPDR Straits Times Index ETF and the Nikko AM Straits Times Index ETF, both of which track the 30-stock Straits Times Index very closely and with low expense ratios to boot. Indeed, why stop at Singapore, a tiny red dot in a big big world? Why miss out on the business opportunities presented by hundreds of firms spread across the continents?
The real answer to these “whys” is that investors simply don’t like diversifying broadly. What they want is bet on a few stocks in the hope that these stock pircks