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Apple and Amazon, two examples of long-term investment

long-term investment, short-term investment,, Apple, Amazon, Micorsoft, Google

long-term investment, short-term investment,, Apple, Amazon, Micorsoft, GoogleDo you prefer a long-term investment? When you invest, you have to think in terms of long-term, not short-term. Observing the fresco as a whole, do not miss in detail. How many times, we savers, have been heard that sentence? In principle, we all agree, but we try to immerse the theory into the reality of successful equity securities that have suffered frightening collapses in the short run. Could we keep cold blood?

Let's start with the world's largest company: Apple. Who had invested a thousand dollars in Apple's shares at the time of the listing in 1980, would find himself now more than $ 25 million, with an average annual performance of 17% (more than double the S&P500). Everything is very nice.

We now try to put ourselves in the shoes of the unsure investor who buys Apple on the Internet bubble peak in 2000, perhaps by investing a good part of his savings because he is convinced that the stock exchanges are intended to "make money". The unfortunate saver who invests a thousand dollars in 2000, finds himself two years later with just $ 180 (-82%). And then, psychologically destroyed, he probably sells everything.

A loss, in two years, of 82% of his investment, in contrast to the long-term investor that has held his nerve and keeping tight his Apple shares, between 1980 and 2016 brings home a cumulative gain of 25,217%. Besides, the collapse of the internet bubble was not isolated. Apple has lived another black long period, between 1991 and 1997, where it still lost 82% of its value. But in the end, the long-term performance has remained intact: a sensational + 25,217%. But there is also who did better.

Let's change share and see what happens with Amazon. Our long-term investor who decides to bet a thousand dollars on the big promise of e-commerce in 1997 at the time of listing, is now even richer (and in less time) of the Apple's long-term investor: in the end of 2016, he will have in his pocket nearly 39 millions of dollars, with an average annual Amazon performance of 36%.

From a thousand dollars to 39 million in just nineteen years. But beware: Who buys a thousand dollars of the Bezos company before the internet bubble burst, will find himself less than two years later with just 60 dollars: between December 1999 and September 2001 the Amazon title lost 94% of its value. While the long-term vision gave the wise investor a cumulative performance of 1997 to 2016 of 38,882%.

Same music for two other Wall Street queens, Microsoft and Google. Thousands of dollars invested in Gates's company at the time of the listing in 1986, today have become more than 92 million dollars. From one thousand to 92 million in thirty years, with an average annual gain of 25%. But beware: between 1999 and 2009 Microsoft shares lost 70% of their value.

Same music for Google: One thousand dollars invested with the 2004 listing has become nearly a million and a half in just twelve years, with average annual growth rates of 26%. Within this gallop, here's the black hole: in 2007/2008 the California search engine shares have lost 70% of their value.

The moral? In a long-term investment, the short-term losses are part of the game, but if the company is solid and its business model is valid, not to become stressed, by losing sight of the general fresco. History teaches.

 

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