woulda, coulda, shoulda
It’s not uncommon for me to hear stories of regret or disappointment when talking with people about their investment history. The reasons for this vary widely but a frequent one relates to what people feel are missed opportunities. It often sounds like this:
“I wish I would have bought Amazon 20 years ago”
“I owned Apple years ago but sold it”
“I almost bought Microsoft”
These reactions are natural and in hindsight these decisions are easy to criticize, but let’s look a little deeper at the ride that the three largest companies in the world by market cap have had.
- Initial public offering on 5/15/1997
- Amazon went up over 900% in 1998
- The stock price fell more than 94% in 2000-2001 and it took over 8 years for the stock to rebound to its prior high
- Its first profitable year was 2004
- An investment of $1,000 would be worth over $1.3M today
- Initial public offering on 12/12/1980
- Apple stock went down over 81% when the tech bubble burst and fell 51.9% on September 29, 2000 alone
- An initial investment of $1,000 would be worth over $800K today
- Initial public offering on 3/13/1986
- Microsoft was profitable well before the IPO but Bill Gates wanted to retain more control before going public
- During the “lost decade” of 2000-2010 when the S&P 500 was down about 9% over that period, Microsoft fared even worse, down over 36% in that decade. The S&P 500 suffered a dip of over 55% while Microsoft dipped almost 69%
- Microsoft stock had a period of over 9 years from a peak price to a bottom price and it took more than 5 additional years for it to get back to that prior peak, for a painfully slow 14+ year ride
- An initial investment of $1,000 would be worth over $2.5M today
As you can see, all of these companies have dealt with major ups and downs which can explain why many people who may have owned them at one point didn’t stick around for the entire ride as the future is impossible to know.
In my experience as a financial advisor, I’ve never met someone who’s wealth came from buying that one lucky stock that made them into a multi-millionaire. I’m sure it happens (so does winning the lottery), but it’s not very common. The closest thing I do see as it relates to benefitting from one specific stock are employees who had the good fortune of working at companies like these before they became the companies they are today, and received stock options as part of their compensation. I attribute this success to people being fortunate in their career, not due to their investment genius. Being in San Diego, the most common example I see is those who started working at Qualcomm years ago and have benefited from that company’s significant growth.
So, while I haven’t met anyone personally who became rich from investing in the right company at the right time, I have met many people in which the stock market has played a key role in helping them become millionaires. Their success can be attributed to their discipline of being consistent, long-term investors.
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