Re: That is true but people don't invest in a fixed, a priori number
of shares like they were buying it for wallpaper. They invest
a specific sum of money. If you invest $3000 at $3 you get
1000 shares and end up with 1000 shares worth $30k at
$30, a profit of $27k. If you invest $3000 at $15 you get 200
shares and end up with 200 shares work $6k at $30, a profit
of $3k.
True, but this is giving the benefit of hindsight to a hypothetical situation. First, the lowest the stock has hit in recent history is $3.10 in October, 2002. I'm sure all the 'Droids would like to claim that they bought here knowing full well they'd be hitting $30 by 2006, but that's a load of crap. In October, 2002, AMD was losing a ton of money every quarter, they were fraught with major execution problems, their current products were uncompetitive, and Hammer was slipping farther to the right each and every quarter. Plenty of Wall Street was questioning whether AMD would still be around in a few more quarters, so don't tell me that just anyone would have invested the same amount of money in the stock at $3.10 in that point of time, compared to $15 these days. It's a different story, all driven by hindsight.
Second, Bobs claimed to have invested in AMD when they were worth $3 split-adjusted. The last time AMD was worth under $10 pre-split was in August, 1992. Yeah, the rate of return would be pretty nice if it were purchased at this price, but the return per year would be pretty poor if you compared that vs. buying at $15 fairly recently.
It is because of these things that I discussed profit per share vs. rate of return. AMD had a pretty nice run, from the time when Wall Street was just about to give up on them, to the point where they started gaining major percentage points of market share from Intel in the server space. Even so, only a few of the staunchest risk takers bought during those lows and are still around to brag about it. They should be congratulated for their risk taking and good timing, but getting lucky then doesn't make them an expert now.
