If you have an IRA or 401k as part of your retirement investment portfolio, there is probably a chance that you at least had a passing notice about the stock market over the years.
And if you watched it regularly, you may have suddenly found yourself averse to roller-coasters.
While on a month-to-month or year-to-year basis the market can easily make you seasick or make it feel like your stomach is in your throat, over a long-term basis (10 years or more) the market has actually only gone on an incline. There is virtually no 10-year period in the history of the stock market in which the market was lower at the end of the 10 years than it was at the start. Whether you account for inflation or not.
So if you have patience and are willing to survive all the short-term ups and downs, you can have confidence that over the next 10, 20 or 30 years, your investment will grow.
While we can’t actually predict what will happen (maybe we know the markets will grow in value, but we don’t exactly know by how much in any given timeframe), we can at least look back at some successful stocks and learn something from them.
No one really knows which stocks will “hit” and become a roaring success, so hindsight can’t really encourage us. However it can serve as a useful model for reminding us that our portfolio should always be diversified across several economic sectors and industries as well as over a variety of companies in the same industry, like large, mid-size, small and micro sized companies.
In that vein, we’re giving you some examples of some companies that, had we invested 20 years ago with $1,000 for our portfolio, we would be sitting pretty financially right now. This can be heartening to you because diversifying your portfolio now means an increased chance of your portfolio having a stock or two that hits and produces far better returns that the market over the same timeframe, which makes you even more money than you might expect.
To give you an idea, here are 10 stocks that have taken off in the last 20 years, and we can show you what an initial $1,000 investment in spring 1992 might be worth now, and we can then give you a sense of our sample “portfolio” would be worth had we been invested in these 10 companies today.
10 Stocks That Made A Killing
#1. Kansas City Southern (KSU)
Yes, you read that right. Over the last 20-plus years, the market has about tripled in value (that is a 300-percent return), but this particular stock has even outpaced the market by more than 60 times. The funny thing is, the company began as a railroad/money-management mutt, until the Janus Group broke off as a separate entity – and that was considered the more valuable piece. But since the split, the railroad company has thrived beyond most analysts’ wildest dreams.
Total Return (spring 1992): About 19,000%
$1,000 then = $191,000 today
#2. Middleby Corporation (MIDD)
When it comes to cooking equipment, Middleby is considered one of the best companies in this industry. Analysts have loved what this company has done in developing innovative products that save on labor and make working in the kitchen a lot less work.
Total Return (spring 1992): About 14,250%
$1,000 then = $143,500 today
#3. II-VI Incorporation (IIVI)
Known as “Two-Six,” this is the most “explosive” of the high-tech stocks on this list. The main reason is that the company’s focus is in laser technology, specifically “optics,” which are considered “razor blades” in lasers that provide precision work in many industrial verticals. As lasers are more widely used, Two-Six has taken full advantage of the explosion in their use. Its growth essentially mirrors the increase in market share of the technology across the economy.
Total Return (spring 1992): About 10,250%
$1,000 then = $103,500 today
#4. EMC Corporation (EMC)
This well-known international tech company was hit hard by the dot-com bubble at the turn of the century, but it is a great rebound story. It was one of the few companies that came out the other side, and it is one of the leaders in data-storage options and solutions. Its current stock price is only a shade above its post-crash price of $28 in 2000, which is one-third where it was prior to the crash, but it has a current market cap of better than $60 billion.
Total Return (spring 1992): About 9,500%
$1,000 then = $96,000 now
#5. Qualcomm Incorporated (QCOM)
This company is valuable mainly for its patent portfolio, which is deep and is mainly focused on wireless technology. With wi-fi becoming virtually everywhere, Qualcomm licenses its patents to virtually every wireless-device maker in the world, so it gets royalty payments from everywhere.
Total Return (spring 1992): About 9,250%
$1,000 then = $93,500 today
#6. Oracle Corporation (ORCL)
This company’s total return probably should be even higher, but the stock price is only about two-thirds of what it was at its peak just before the dot-com crash. Still, though, this well-known technology company (the creator of JavaScript) has been effective in software and hardware configuration and systems for many years. The prevalence of Google and Apple and their proprietary coding has stunted Oracle’s market share, which keeps it from getting back to its past levels.
Total Return (spring 1992): About 8,500%
$1,000 then = $86,000 today
#7. Diodes Incorporated (DIOD)
Sometimes, simple is better. For Diodes, this means much of its value is located in the very smallest of computer chips in an electronic device – the ones that are the switches that regulate the flow and direction of power through a device, powering audio, video, phone calls, etc. While Diodes chips are not in every device, there isn’t a type of device in the world that would not have a Diodes chip inside it.
Total Return (spring 1992): About 8,500%
$1,000 then = $86,000 today
#8. Biogen Incorporation (BIIB)
Known for its work in medicine with developing therapies for various illnesses, the stock really hiked up on news that clinical data on a new pill created to treat multiple sclerosis (MS) was much more encouraging than anyone expected. The news was considered a rare “breakthrough” in biotech.
Total Return (spring 1992): About 6,250%
$1,000 then = $63,500 today
#9. Celgene Corporation (CELG)
A leader in biotech, Celgene has been active in developing therapies for cancer and other diseases classified as “immuno-inflammatory” conditions. It does not bank on rare “breakthroughs” like other companies. It produces reliable, dependable therapies over the years that save many lives and improve quality of life for many patients.
Total Return (spring 1992): About 6,250%
$1,000 then = $63,500 today
#10. Astronics Corporation (ATRO)
With a market cap of just more than $40 million, Astronics is considered a small-cap firm among the stock market crowd, but it has been developing strong growth over the years as the aerospace and defense industries have grown. With the world exploding, defense is a huge investment for many governments, and with private space exploration now coming to reality, Astronics has benefitted and may benefit into the future.
Total Return (spring 1992): About 6,000%
$1,000 then = 61,000 today
Portfolio Value
So had we invested $1,000 in each of these 10 companies way back in 1992, what would our $10,000 look like today? We would be sitting pretty at just under $1 million dollars. To be exact, $987,500.
The Real Lesson Of Investing
The point of noting these companies was to show you that you never really know who will hit it big and who will not. Most investors have never heard of some of these companies. Other investors ran for the hills on the tech companies when the dot com bubble burst.
Even more investors ran away from investing altogether after the market crashed in 2008. Since we don’t know which companies will be stars and what the market will do on a daily or yearly basis, we have to rely on a long term approach if we want to experience success in the stock market.
What do you have to do in order to take a long term approach? Luckily the process is straightforward and is easy to implement.
For starters, you need to create an investment plan. This will outline your goals and how you plan to invest. It will also help you to stay invested when the roller coaster days rear their ugly head.
From there, you need to invest in a diversified portfolio. Since you most likely won’t spot the next Kansas City Southern on your own, your best option is to own all of the market. This ensures that you will own the big winners.
Next, you need to stay invested over the long term. You have to keep your focus on the long term and not get caught up in the day-to-day fluctuations. I know it’s tough. The media hypes the stock market when it is falling. So much so, you allow your emotions to guide you.
But your emotions misguide you all of the time. And not just when it comes to investing, but with all things in life. Understand that the market will fall and it will rise. And it will fall again. But over the long term, the trend is positive.
If you can create an investment plan along with a diversified portfolio, you are 90% of the way to stock market success. All that is left is navigating the noise – the daily updates and the doom and gloom predictions. This is the tough part but it can be done. With a clear mind and rational thinking, you will be able to stay invested for the long term and see the fruits of your labor.
Author Bio: Jon blogs at Money Smart Guides, a personal finance blog that helps readers get out of debt and start investing for their future.
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