Most everyone is pulling their hair out and fretting about when this stock is going to go up; why is it so lethargic, why is it down so far from its highs, why is this injustice so profound? But what I find myself thinking the most about, is how high will it go, what will the picture look like when SGLB is properly ripe and properly priced, what will it look like when it is time to sell?
Here is an excerpt of an article from Ritholtz showing just how hard the sell side can be. Do you think that you will allow SGLB to mature in price? It is doubtful.
All the best,
Silversmith
Let’s use the shares of five companies as examples: Google, Tesla, Chipotle, Netflix and Apple.
The performance of each since its initial public stock offering has been nothing short of astounding. Since going public, each stock has generated returns of more than 1,000 percent. A $10,000 IPO allocation in any one is now worth at least $100,000.
To give you an idea of just how phenomenal these companies have done, Google is the laggard of the lot. Since its IPO in August 2004, it has gained a mere 1,282 percent. Tesla edged out the boys from Mountain View, Calif., with a gain of 1,352 percent. And they did it in less than four years – Tesla’s IPO was June 2010 – vs. the decade it took Google to gain 1,000 percent.
Those spectacular returns look downright paltry compared with the 2,865 percent gain Chipotle has had since going public in 2006. And Netflix beats that, rising 5,816 percent since 2002.
Then there is Apple. It is a beast unto itself, racking up a mind-boggling 22,288 percent in appreciation since its 1980 debut. It has become world’s biggest company by market capitalization.
Even if you bought large chunks of each of these firms at their IPOs, the odds are that nearly all of these giant gains would have eluded you. Why? As I shall show you, each of these companies would have sent you running for the exits – repeatedly – over the years, screaming as if your hair were on fire.
Don’t believe me? Consider the facts:
• Netflix has lost 25 percent of its value on four separate days. Not over four days; on separate occasions, it lost 25 percent in a single day. In one four-month stretch in 2011, it lost 80 percent of its value. On Netflix’s worst day, it fell 41 percent.
• Chipotle has lost 15 percent in a single day on four occasions. During the 2007-2009 crash, it lost 76 percent of its value – about 50 percent worse than the market overall.
• Tesla went up 400 percent in 6 months, then lost 40 percent over the next 10 weeks. In one month, it lost about 25 percent of its value.
• Google lost nearly 70 percent in the Great Recession. During its worst quarter, its stock price fell more than 36 percent.
• Apple has lost 25 percent or more six times in the past 10 years alone. That was after its meteoric rise. During its worst week, it was cut in half, falling 51 percent. It saw similar damage during its worst month and quarter as well – getting cut in half in each time period.
How often have you invested in a stock, only to get scared out of it when things grew shaky? That’s fairly typical behavior for investors.
Now imagine how you would have behaved if you happened to have a significant part of your net worth tied up in that one holding.
Let’s say a decade ago, you put $15,000 into Apple. You bought 1,000 shares at $15 (with $13 cash) because you thought that newfangled iPod had some potential. Since then, it split two for one and then earlier this year, it split seven for one. You now are holding 14,000 shares of Apple. At the current price of about $100, it is worth $1.4 million dollars. For most people, this is a very high percentage of their net worth. How well do you sleep when 90 percent of your total net worth goes through giant swings?
Apple was worth about the same amount in September 2012 – just before it gave back almost half its value, falling 44 percent. Would you have held on? What about all of those prior 50 percent corrections?
This is not an academic theory. Consider how you have reacted to much more modest drops in your holdings. How often were you shaken out of a stock, only to see it rocket higher after you sold? And somebody was dumping stocks in March 2009; after all, selling climaxes (also known as capitulation) are how bottoms are made.
AI
