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Highest Possible Returns

Written by

John Hunter

in

,

fool.com is an excellent site. They offer commentary that is both informative and even better educational. One strong theme they preach is to buy for the big score. Today, one of the founders, David Gardner, has a great article on this theme: The Highest Possible Returns. Period.

The Wise of Wall Street would chalk up AOL’s 35% annualized gains to luck. “No one can really identify the great companies of the next generation,” they’d say. Growth stocks are too risky, according to the Wise; it’s best to avoid that style of investing altogether and let a Street “expert” manage your investments.

I disagree. Investing in great companies early on in their high-growth stages, then holding them for the long term, will provide the highest possible returns. Period.

We call those companies Rule Breakers. Our investment service of the same name seeks out the great growth stocks of tomorrow — the potential AOLs — before the Street catches on.

I missed out on the IPO for Google, much as he missed out on AOL. Luckily for me, I did buy at $220 (the IPO price less than a year earlier was $85): now it is at $476. Buying after you watch a stock more than double is not easy. My investment experience helps me make that decision today when I likely would have decided not to buy before – thinking I should have bought before it doubled so since I didn’t I wasn’t go to jump in later… I doubt I would buy Google now but I am keeping what I have.

Related: 10 stocks for 10 years update

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One response to “Highest Possible Returns”

  1. S&P 500 Dividend Yield Tops Bond Yield: First Time Since 1958 at Curious Cat Investing and Economics Blog

    “Dividends paid by Standard & Poor’s 500 Index companies in the past 12 months amounted to 3.51 percent of the benchmark’s closing value yesterday. In early trading today, the 10-year yield fell as low as 3.42 percent…”

    Reply

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