Fairy Tale Corner: 5 Stocks That Could Have Made You $178M in 5 Years

0
Comment

July 14th, 2011

Yeah, right!
If I was the best stock picker in the world, what’s the biggest financial haul I could have scored from stocks? To find out just how profitable having uncanny stock-picking abilities could be, let’s put some numbers behind it. Investors can take a look at the Standard & Poor’s 1500 index, which includes stocks of all sizes, and locate what the best stock in the index was each year.

Amazing luck
Had you had the amazing luck to pick the best stock each year, your total price appreciation and winning stock each year would have been (according to Standard & Poor’s Capital IQ and USA TODAY research):
2006: CorVel (CRVL), 275.8% gain
2007: First Solar (FSLR), 795.2% gain
2008: Emergent BioSolutions (EBS), 416% gain
2009: Select Comfort (SCSS), 2,508% gain
2010: Entropic Communications (ENTR), 293.5% gain

How it would have looked
Imagine investing $10,000 at the start of 2006 in that year’s best stock, CorVel, and then moving your money each year to the following year’s best stock. The value of the portfolio would have grown at the end of each year to:
2006: $37,580
2007: $336,529
2008: $1,736,490
2009: $45,287,659
2010: $178,206,938

The figures are right
Yes, you read that right. If you picked the best stock of each year, your $10,000 investment would be worth $178.2 million in just five years. That’s an average annual return of 608%. Not bad.

In retrospect
Of course, it’s easy to do this kind of analysis looking backwards. We’re all stock-picking geniuses in hindsight. Yet, at the beginning of the year, it’s all but impossible to predict what the best stock will be. Even investors who stumble on a great stock make subsequent mistakes by selling at the wrong time. Nonetheless, considering how powerful the wealth generation of stocks can be, it’s easy to understand why so many investors want to try their luck.

Lady luck
Lady luck has worked miracles for me once and I’m waiting for her to come up with something even more impressive any day now. About 15 years ago I sold our house which was too large for the two of us. I took some of the money and headed for the stockbroker with a short list of stocks. One of them was Yahoo. I had heard much about the company and I bought shares. I watched in amazement as they soared, cursed myself for not buying more and cheered when the stock was split and I doubled my holding. They continued to soar.

Riches
Every day I dreamed I was rich, richer than I had ever been. I spent hours planning how to spend the money on all sorts of things I didn’t really need. Then I began to worry about losing my fortune. I mean the money wasn’t certain until I sold, right? I developed a twitch at the side of my mouth and I couldn’t sleep. Finally I caved in, sold the shares, took some of the money and bought a modest new car.

Where are you now Lady Luck?
I could use a little help!

This entry was posted on Thursday, July 14th, 2011 at 3:55 am and is filed under Business, Economy, Finance, Money, Personal / Internet. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Fairy Tale Corner: 5 Stocks That Could Have Made You $178M in 5 Years

Leave a Reply