The end of the year often makes me nostalgic about days gone by. That explains why last’s weeks commentary was on “3 Investment Lessons Learned in 2019”.
Today I want to go even further back. Like 2001 when I purchased the two best stocks of my investing career.
No…my intention is not to brag. Rather, to focus on what went right with these investments in the hopes of helping us all find more big winners in the future.
And the 2 Stocks Are…
Amazon bought @ $8.58 for a gain to date of 20,594%.
Priceline (now Booking Holdings) bought @ $14.62 and up 13,509% in total.
It looks so obvious now. But what’s so funny is that back then these stocks were tumbling lower. Especially Amazon which many experts said would NEVER make a profit given the low margin business and competition from others. Oh how wrong they were!
Let’s dig in further to figure out what each has in common.
Most obvious is that it was the early days of the internet and these were two pioneers of ecommerce. So riding a big wave of innovation is certainly are part of the winning equation.
Another similarity is that they were the early leaders in their respective categories. And often that early market share lead tells you who will dominate in the long run with lesser players falling by the wayside.
This is where investing legends like Lynch, Cramer and Buffett agree. Meaning to concentrate your investments in the top industry players because quality and excellence are business advantages that can stay with a firm for many, many years.
Both AMZN and BKNG invested heavily in R&D to keep innovating. Sometimes that led to underwhelming quarterly earnings. But in the long run it kept them a step ahead of the competition. Amazon more so than Booking in this case.
The last point that stands out is that I didn’t buy them at peak valuations. I bought them after a big pullback. This is where growth and value combine to find the best long term winners.
Where to Find the Next Big Winners?
I would like to say it’s easy…but it’s not.
Meaning far too many investors believe that the solution is just to look for stocks enjoying the biggest year over year growth rates. However, academic research clearly shows that these are some of the least profitable stocks.
Why?
Too often the lofty expectations are not met and the stocks implode.
What is required is in-depth research into these growth areas like 5G, Blockchain, Medical Cannabis, Internet of Things, Cancer Drugs etc. And on top of that is a disciplined approach to the stock picking as not to chase overpriced stocks that are the next big losers.
If this approach sounds appealing to you, then you should check out our brand new POWR Trends newsletter.
This is where we blend phenomenal growth with the safety that comes from using the POWR Ratings system. And right now we are offering 3 additional free reports on the top stocks in these exciting growth arenas:
- Cloud Computing
- Graphene
- Millennials
Wishing you a world of investment success!
Steve Reitmeister
…but my friends call me Reity (pronounced “Righty”)
CEO, Stock News Network
Editor, Reitmeister Total Return
AMZN shares were trading at $1,765.70 per share on Friday afternoon, up $5.37 (+0.31%). Year-to-date, AMZN has gained 17.56%, versus a 28.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
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