Thursday, August 18, 2016

Big Winners and Big Drawdowns (NVDA; AAPL; AMZN)

Following up on the intro to yesterday's "Competition For NVIDIA: The Nervana Systems Chip That Will Let Intel Advance Its Deep Learning (INTC; NVDA)":
In addition, with the stock down two days in a row and $1.32 below the most recent all-time high this is probably a good time to point out the drawdowns can be big in this type of investing. That said, NVDA is the class of the field. $61.98 down 62 cents.
Here's a serendipitous and timely post from Pension Partners:
Apple, Amazon, Microsoft and Alphabet…

-All among the largest and most revered companies in the world.
-All have retuned unfathomable amounts to their shareholders.
-All have experienced periods of tremendous adversity with large drawdowns.

When it comes to big winners in the stock market, adversity and large drawdowns probably aren’t the first words that comes to mind. We tend to put the final outcome (big long-term gains) on a pedestal and ignore the grit and moxie required to achieve that outcome.

But moxie is the key to long-term investing success, for there is no such thing as a big long-term winner without enduring a big drawdown along the way…

Apple has gained 25,217% since its IPO in 1980, an annualized return of 17%.
Incredible gains, but these are just numbers, masking the immense pain one would have endured over time. Apple investors from the IPO would experience two separate 82% drawdowns, one from 1991 to 1997 and another from 2000 to 2003.
Amazon has gained 38,882% from its IPO in 1997, an annualized return of over 36%. To put that in perspective, a $100,000 investment in 1997 would be worth just under $39 million today....

HT: Alpha Ideas' Aug. 18 Linkfest