FinTekNeeks

From Minimalism To Tech

Investing in Category Leaders

Posted in Trading

The following article covers trading financial securities, such as stocks. The world of trading often comes with rises and declines of securities, and most things do not rise or fall in a straight line. By the time this article is published, circumstances involving what we mention may h ave changed. Often, changes in securities can be to the detriment to the traders – seldom is it beneficial. A person should only trade with money that they’re willing to lose because losses are guaranteed. By reading this post, you agree that you’ve read our disclosure.

Introduction

Facebook, Amazon, Netflix, and Alphabet (formerly Google) are very popular companies and stocks to invest. If you were one of the lucky ones to invest early, you will have done very well for yourself. Most likely you were not as lucky as the venture capitalists, employees with options, and pre-IPO investors. But, if you purchased stock at the right time before prices started accelerating higher, you will have made many times your investment. Some consider these companies as category leaders.

Facebook ($FB) If you were to invest after the IPO in 2012, you would have made 5 times your investment. You could still have made an investment through mid-2013 and gotten significant returns.

$FB Source: finviz.com

$FB
Source: finviz.com

Amazon ($AMZN) If you were astute enough (or lucky) to invest after the 2008 financial crisis, you could have invested at the beginning of 2009. By buying $AMZN around $60, you would have made 12 times your investment from 2009. Even as late as early 2015, you could have invested in $AMZN and still doubled your money.

$AMZN Source: finviz.com

$AMZN
Source: finviz.com

Netflix ($NFLX) If you invested in the beginning of 2009, you will have made 22 times your investment. With volatility, you could still have made significant returns by buying in 2013.

$NFLX Source: finviz.com

$NFLX
Source: finviz.com

Alphabet ($GOOGL) Again, even if you missed the Dutch auction IPO, you could have invested in 2009 and received 4 times your investment.

$GOOGL Source: finviz.com

$GOOGL
Source: finviz.com

With equal amount of shares invested in all four of these stocks, you would have returned 6 times your investment.

Hypothetical investment of FANG stocks

Hypothetical investment of FANG stocks

Of course, hindsight shows a clear picture of what I should have done. For whatever reason, I did not invest in any of these stocks. I thought these companies had great opportunity. However, I’ve made many excuses:

  1. The stock is too expensive.
  2. The stock rose too much and is overvalued.
  3. See, the stock went down and will continue to go down.
  4. There is no way they can continue to make money.
  5. They cannot beat the huge companies they are competing against.

Hopefully, I have learned something from my inaction on these stocks. Of course I can’t just jump into any technology stock that comes along, believing that they will “change the world.” But, I may take a little risk in investing promising companies, investments that can be category leaders.

One investment that I believe is a category leader is Bitcoin. Bitcoin started the decentralized electronic currency and is the dominant leader in this category.

BTCUSD Source: finviz.com

BTCUSD
Source: finviz.com

Please make sure you do some research before you invest. Bitcoin.org and subreddit /r/Bitcoin FAQ would probably be the best bet in understanding Bitcoin.

My next article will give reasons why I invested in Bitcoin and will continue to invest in Bitcoin. Also, I will determine what conditions will exist for me to sell my investment.

Disclaimer: This is not a stock/investment recommendation and I do not own shares in FANG stocks. I do own some Bitcoin. Consult your financial advisor for any investment advice.

 

 

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