Buy Disruptive Innovation!

I recently read a LinkedIn post written by Ray Dalio, the chief investment officer of Bridgewater Associates.

Bridgewater Associates is the largest hedge fund in the world. Ray Dalio is a hedge fund legend.

The title of the post was “Paradigm Shifts”. Ray went into great detail about the different paradigm shifts that have occurred over the last 100 years.

It was an excellent read, and I highly recommend it.

There was one piece of information that was very intriguing to me. I did not know that the two worst decades of stock performance were from 1930 to 1940 and from 2000 to 2010.

Since I was alive for the latter period, I decided to do some digging. I wanted to see how companies focused on disruptive innovation performed during that decade.

If, as I do, you like to invest in disruptive innovation, what I found was very interesting and exciting!

Here are the numbers:

Performance of Each Index, 2000-2010

Dow -9%
S&P 500 -14%
NASDAQ -34%

I chose 10 stocks that represented disruptive innovation, and here’s how they did over that 10-year period…

Amazon (NASDAQ: AMZN) +136%
eBay (NASDAQ: EBAY) +177%
Apple (NASDAQ: AAPL) +1250%
Illumina (NASDAQ: ILMN) +784%
Priceline.com (now Booking Holdings, NASDAQ: BKNG) +40%
Nvidia (NASDAQ: NVDA) +262%
Intuitive Surgical (NASDAQ: ISRG) +1500%
Whole Foods (now a subsidiary of Amazon) +431%
Netflix (NASDAQ: NFLX) +3100%
Monster Beverage (NASDAQ: MNST) +9000%

This small sampling shows the advantages of investing in disruptive innovation. During the second-worst decade in the history of the stock market, these stocks crushed it!

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

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Losing Is Part Of Winning!

Good morning!

Warren Buffett is considered one of the greatest, if not the greatest, investor of all time.

His first two rules for investors are as follows:

Rule Number One: Don’t lose money.

Rule Number Two: See Rule Number One.

Now, let me tell you off the bat that being down in an investment will happen for sure.  After all, my crystal ball hasn’t worked in years, and I doubt yours will be any better.

Being down, however, does not mean you have lost money.

I’m going to share my personal experience with you.

Two years ago, I purchased shares in a company called Splunk (NASDAQ: SPLK).

Splunk is a leader in cloud computing, data analytics and security.  They help companies make sense of the massive amounts of data they collect.

When I purchased the stock, the price was $69 a share.  Soon after my purchase, it proceeded to go from $69 to $54 over the next few months.  That’s a 21% decline, in the blink of an eye.

Fast forward to January 2019, and…the stock is at an all-time high of $135.

Here’s another example for you.  Around that same time, I bought shares in a company called Invitae (NYSE: NVTA) for around $7 a share.  Invitae is a small genomics company trying to become the Amazon of their industry.

Soon after my purchase, the stock went to $5 a share – a 28% haircut.

Over the next six months the stock would remain between $5 and $6.

Today, it’s $17.

Many times, you’ll have to lose in order to win.  You’re not always going to purchase a stock at the bottom and have it be smooth sailing all the way.  That’s how investing works.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)