Three Of The Greatest Financial Investments Ever Made!
Peter Sayles |
The Top 3 Best Financial
Investments Ever Made
Making thousands of percent returns on an investment is near impossible for 99.9% of investors. Professional or amateur.
The hardest part of investing is not picking the right stocks. But rather holding onto the stock for years or decades.
Investors have a hard time holding for more than a year in today’s day and age. The average investor holding period is now just over eight months.
To expect a private or public company to return thousands of percent in eight months, let alone one that doubles is foolish.
Time is an investors biggest friend and enemy. The need to “do something” prevents investors from simply holding.
Chris Mayer – one of the great fundamental investors of our day – wrote a book on how to get 100x baggers (stocks that return 100-to-1).
He covers dozens of stocks that could’ve returned 100x an investors money. (Example: Turning $10,000 into $1 million).
For example, L Brands (owners of Victoria’s Secret) returned more than 100x investors money in just eight years (from 1978-1986). Southwest Airlines returned more than 100 times in about 10 years starting in 1971.
There are other traits to earning multi-bagger investments too. You can get a brief overview of those other traits here.
But we’re not covering investors who earned 100x their money in this post. Nor are we covering investments that earned 10,000%. We wanted to go bigger. And find out what some of the best investments ever made were.
We’re talking thousands of percent returns.
So we’ll list just three.
1) Grace Groner turned $200 into $7 million
Grace was just a secretary from just outside Chicago, Illinois who got her clothes from garage sales.
She took a job at Abbott Labs in 1961. In 1965, she invested $200 to buy three shares in the company.
Grace held onto her shares until the day she died in 2010. Her $200 investment became $7 million through dividends, stock splits, and dividend reinvestments – earning her a 35,000% return over 45 years.
Her $200 investment compounded at just over 26% per year for those 45 years.
Almost no average investor is able to actively make those types of returns trading in and out of stocks. Only the likes of Stanley Druckenmiller can accomplish such feats.
Druckenmiller earned 30% annualized per year throughout his investment career.
Grace was able to earn 26% per year just by sitting on her hands. She probably didn’t care about the daily fluctuations of the stock market. She just let her shares compound each year.
We know how difficult it is just holding without locking in “some” gains. That’s why we hate articles like this: “If You Had Invested Right After Amazon’s IPO.”
Amazon IPO’d in 1997. It’s wholly unrealistic to expect an average investor to ride a tech stock all the way up to the top in 2000.
Then withstand a 94% drop when the tech bubble burst. A 56% drop from 2003-2006. And then another 60% drop in 2008.
The only people who could truly stomach those drops are ones that forgot they owned shares in the first place.
But that’s really what you need to do to earn an 83,400% return if you bought Amazon on the day of their IPO and held till today. (Many traders and investors sell half their position once the stock doubles so the second half is “house money.”)
But there’s no way to earn these types of returns by selling at a double, triple, or even 10x without having suffer major drawdowns at some point. Recessions and bear markets are inevitable. They’ll likely happen multiple times within a 20-40 year holding period.
Grace Groner didn’t care about recessions, wars, or who was sitting in the Oval Office. She knew her shares were ownership in a solid business. So she held for decades. And became a legend earning a 35,000% return over a 45 year period.
2) Naspers Makes 60,000% On Tencent Investment
Naspers (NPSNY) is a publicly traded holding company based in South Africa.
Naspers has made some remarkable investments over the past years.
Namely their investment in Tencent. Naspers bought $32 million of Tencent Stock in 2001.
This gave them about a 1/3 ownership stake in all of Tencent. Naspers sold a 2% stake back in March 2018 for $10 billion when the value of their Tencent stake alone was worth $175 billion.
This locked in a 60,000% return in 17 years – a 45% compound annual growth rate. (Naspers still owns 31% of Tencent shares outstanding).
We’ve been hard pressed to find any investment pay off as much as this one. It has to go down as one of the greatest investments of all time – including this return within just a 17 year period.
Side note: Naspers has made dozens of incredible investments including their recent investment in Indian e-commerce company Flipkart – which netted them $1.6 billion and a 300% return.
3) Masayoshi Son From Softbank Made A 690,000% Return on Alibaba
Masayoshi Son is the richest man in Japan.
Forbes pegs his net worth at $27.5 billion.
He’s the CEO of the multinational corporation called Softbank which invests in almost everything. Softbank is currently known for their Vision Fund in which they raised $100 billion to invest in companies around the world.
Son has used the Vision Fund to invest in $9 billion in Uber, $5 billion in Nvidia, $4 billion in WeWork, $2.5 billion in FlipKart, and many others (you can see some of their top investments here.) He also bought chipmaker ARM Holdings outright.
Son also says he wants to create and raise $100 billion funds every 2-3 years.
He’s able to raise such money with an impressive track record.
Son’s investment in Alibaba could be the greatest investment return ever.
Son invested $20 million in Alibaba – the Chinese e-commerce company – in 2000. Alibaba is considered the Amazon of China.
That investment was worth $138 billion in June 2018 – making the investment returns around 690,000%.
That sort of investment return almost seems unfathomable.
Investors are happy when they double their money. Or even if they make 5-10x on an investment.
Life-changing gains like Grace made are not done in 12-24 months. They’re gained over decades. And Grace never flinched under any geopolitical or macroeconomic scare. She just held tight. Collected her dividends. And reinvested them.
There’s a bit of luck in finding companies like Tencent or Alibaba before they became a couple of the dominant companies in China (and will become globally).
Naspers and Masayoshi Son weren’t just lucky though… they not only did their research and invested early on. But they invested when no one was interested. And made asymmetric bets (bets they can make investors super wealthy with minimal risk).
We’ll publish more articles to come on this topic – but contrarian investors are ones who tend to make the most money.
In this case, Naspers earned a 60,000% return on their Tencent investment. Yet they still own 31% of Tencent. (We think Tencent will be worth a lot more than it is now in the coming years.) Who knows what that return will turn out to be in the future.
Son earned a 690,000% return investing in Alibaba. He could’ve sold on the way up at 1,000% gains. 5,000%. 50,000%. 100,000%.
No. Son continues to hold to this day. And his returns will continue to compound as Alibaba too becomes an empire in its own right.
So to conclude there are a couple common traits you need to have in order to earn gains in the tens of thousands of percent:
- Find an asymmetric bet. You won’t make 10,000% gains buying Apple valued at over $1 trillion.
- Be contrarian. Buy when no one else is interested. Get in before the “herd” comes running. Not many people were interested in Chinese companies in the 90s. Find a small, unknown company that is revolutionizing or disrupting an industry. Nobody was interested in cryptocurrencies just a couple years ago. What are people not interested in today? There may be an opportunity.
- Be prepared to hold on for decades. Grace held for 40+ years. Naspers and Son for 20+ years. Forget you owned that position. Turn off the TV. Delete the finance app off your phone. Don’t be your own worst enemy.