Does the Concept of Buffet vs Ala Carte Works in Investing?

Both gluttons and investors should be aware of the buffet concept. A buffet is a spread which covers many dishes sometimes of different cuisines and many of us in Singapore are aware that the buffet we have tend to be expensively price but only 1-2 dishes stand out while the rest are average at best. Even the very best buffet is expensively priced but does not have all the culinary gems.

ETF- Is it a Diversified Buffet?

In my view, it is. Too diversified and nothing tastes nice on your investment plate. Yes, it plays safe because every dish gets a chance to be on your plate which leaves you "full", however the concept of outsized returns fails when you buy a buffet of stocks because the return from the best dish is overshadowed by the medicore of the many.

Ala Carte- Research and Choose your Own

This is why restuarant hunting is popular because the very good restaurant find serves the best dish enjoyable. Strangely while Singaporeans spend a large amount of time researching for the best places to eat; the contrary is that little time is spent on finding the best companies and relying on financial advisors who serve an average dish at best.

Fundamentally there are many under-researched companies where outsized returns can be obtained; however research and much thoughts has to be put in before finding a gem. Sometimes a few restuarants need to be gone through before one nice dish is discovered.

So to all those food hunters, why not dedicate some time to look for good "food"/ I mean good company to invest in? There are companies out there with lots of juicy cashflow or tenderness in their meat. A few of these good companies have not been added to the STI Index buffet but they offer a good value. Similarly there are overseas companies both listed in SGX and on other exchanges (which we can buy via webull or Tiger) that are under appreciated and offering high dividends which doubles their Singapore counterpart of banks/REITs.

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