This bear market reminds me of my 2 best trades of all time. That was when I bought Amazon (AMZN) and Booking (BKNG) in 2001 while they were going down in a bear market… but now enjoying truly phenomenal profits. Let’s discuss what those investments have in common and how that will help us find more big winners in the coming years. Read on below for more.
Today I want to go back in the time machine, all the way to 2001, when I bought the two best stocks of my investing career.
No…I don’t mean to brag. Instead, I want to focus on what went well with these investments in hopes of helping us all find more big winners in the future.
And the 2 stocks are…
Amazon (AMZN) for a paltry 43 cents (adjusted for split), leading to a total gain of +26.525%.
Priceline (now Booking Holdings (BKNG) bought @ $14.62 and now up +11.274%.
It looks so clear now. But what’s so funny is that these stocks tumbled lower at the time. Especially Amazon (AMZN) which many experts said would NEVER make a profit given the low margins and competition from others. Oh how wrong they were!
Let’s dig further to find out what each has in common.
I hope you can see the similarity to the present time. That is, the purchase was made in a bear market for about a year as the top growth stocks tumbled down, providing truly phenomenal entry points for long-term winners.
Did I buy on the absolute bottom? no
But it was damn close enough in the grand scheme of things. And that’s why it’s also a wise decision to buy some great growth stocks that are now trading 50%+ off their all-time high.
In addition, we also need to consider some other important elements of what makes them great stock picks.
The most obvious is that it was the early days of the internet and these were two pioneers of e-commerce. So going along on a big wave of innovation is definitely 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, while lesser players fall by the wayside.
This is what investor legends like Lynch, Cramer and Buffett agree on. This means focusing your investments on the best players in the industry, because quality and excellence are business benefits that can sustain a company for many, many years.
Both AMZN and BKNG have invested heavily in R&D to continue to innovate. This sometimes led to disappointing quarterly results. But in the long run, it kept them one step ahead of the competition. Amazon more than Booking in this case.
The last thing to notice is that I didn’t buy them at the peak prices. I bought them after a major setback. This is where growth and value come together to find the best long-term winners.
Where can you find the next big winners?
I’d like to say it’s easy…But that is not it.
This means that far too many investors believe that the solution is simply to look for stocks with the highest annual growth rates. However, academic research clearly shows that these are some of the least profitable stocks.
Too often the high expectations are not fulfilled and the stocks implode.
What is needed is in-depth research into these growth areas such as 5G, Blockchain, Medical Cannabis, Internet of Things, Cancer Drugs, etc. On top of that comes a disciplined approach to stock selection to avoid chasing overpriced stocks that are the next big losers. .
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I wish you a world of investment success!
…but everyone calls me Reity (pronounced “Right”)
CEO, Stock News Network & Editor, Reitmeister Total return
AMZN shares traded Friday afternoon at $113.82 per share, down $3.49 (-2.98%). Year-to-date, AMZN is down -31.73%, compared to a -22.20% increase in the benchmark S&P 500 index over the same period.
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