How To Improve Your Returns
I was a little upset this week when I heard that they might be pulling down the iconic Excelsior Hotel in Hong Kong.
They, in this instance, being the upmarket hotel group, Mandarin Oriental (SGX: M04).
But unlike me, who was biting on my lip of disappointment, the market was cheering the news to the rafters. The shares shot up 14% on that eventful Monday morning of 5 June.
To rub salt into the wound, it rose another 4% the very next day.
Sands of time
The hotel, which sits on the edge of Hong Kong’s Causeway Bay, has been around for a good 40 years. It can be a great place to hear Jardines fire the Noonday Gun.
In fact, Excelsior’s lobby coffee shop was one of my favourite haunts. It served some of the best Black Forest Gateau I have ever tasted.
But alas, the sands of nostalgia have finally trickled through the egg-timer of commercial interest…..
….the Excelsior is no longer able to hold its own in a highly competitive and oversupplied hotel sector. Not even its outstanding patisseries and cakes could save it now.
A Singapore tale
What’s more, with property prices in Hong Kong heading ever higher, it makes little sense to try to run an underutilised hotel, when office buildings appear to be in greater demand. They also offer better yields.
Here in Singapore something similar happened not that long ago.
Many of us, I am sure, can remember the popular Funan DigitaLife Mall. It was where we went to look for our computer supplies.
Admittedly, Funan wasn’t nearly as old as the Excelsior. But it too has had to make way for something more profitable.
Recently, a group of Stock Advisor Gold members and I were invited to see the Funan of the future through the magic of Virtual Reality.
The new Funan is expected to generate more revenues for the unit holders of CapitaLand Mall Trust (SGX: C38U).
But the trip was a real eye-opener.
It has helped to ease the pain of having to watch an old friend turn into a pile of rubble.
Investing can be a lot like that too.
I wonder how many of us hang on to underperforming assets in our portfolios for all the wrong reasons.
Sometimes it could be for sentimental reasons. At other times it could be because we hope that their fortunes might take a turn for the better.
Sometimes it might be because we can’t quite bear to crystalise a loss.
It’s something that many of us can be guilty of.
But investing is not about looking back. It is about looking forward.
Biting the bullet
Sometimes, some of the shares that we buy can turn out to be less attractive than we had expected. When that happens, we need to be clinical. We need to be decisive.
We need to be pragmatic and take a look at the future prospects of the company, regardless of how painful that might be.
But it’s never easy to admit that we could be wrong.
So instead of biting the bullet, we hang onto them in the hope that they might, one day, recover. They rarely do.
Prism of reality
Instead of moving forward with better-performing shares in our portfolios, we lumber ourselves with investments that hold us back.
That is not investing. I don’t what it is called. But it is certainly not investing.
Investing is about putting our money to work so that it will grow steadily over time.
That’s what we do at Stock Advisor.
We don’t look at shares through a kaleidoscope. We look at shares through the microscope of reality.
We set out to identify wonderful companies that we could hold for the long term.
But if conditions should change, we are not afraid to make the tough decisions. Let me help you make the right decisions about your investments.
Let me show you what good shares are and what are not. Let me show you how we do it the Stock Advisor way. Just click here.