Investing for long term

There is a common saying - investing is for long term. However, in long term, many things may not be there anymore.

I scanned through the 28 Nov 05 copy of the Share Investment book by Philips Securities and to my surprise, there are really few true-bred Singapore companies with turnover of more than S$100M. Most of our local listed companies are really tiny by world standard.

My past investment strategy has always been to invest in promising growth companies that are projected to grow at least for the next three years. However, many of such companies, even though are in the growth stage, may have irractical earnings and some may even fall into the red due to their small revenue and profit basea - the most recent case being AP Oil. Hence, for small companies, we should set some price targets and take profit from time to time in order to mitigate the risks in holding these small companies. For long term investment, I would probably my definition invest in companies with revenue of more than S$100M and profit of at least S$8-10M which I deemed to be more stable and able to withstand most long term business challenges.

Ultimitely, my long term cashcow holdings for dividend, hence my retirement funds should be those bigger companies with proven track records as these companies are more likely to stay around in long term. However, these companies are normally traded at higher valuation (due to lower preceived risks) and hence I could only get at a bargain during prolong bear market or unexpected shocks event.