🧠 Lessons From A 30-Bagger


View Online | Sign Up | Advertise

Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today's Issue Read Time: <3 minutes

  • Lesson: Big Stocks Getting Bigger
  • Timeless Content: How to think about your cash position
  • Thread: 10 Investing lessons learned the hard way
  • Resource: Deep dive on the 4% rule
  • And more!

TOGETHER WITH SHORTFORM:

I (Feroldi here) have learned more from reading books than any other medium. However, books require a substantial time investment. That's why I love using Shortform.

Shortform is home to the world's most comprehensive nonfiction book summaries, allowing me to get the key information I need in a fraction of the time without losing any of the substance.

Check out some of my favorites like Thinking Fast And Slow and explore a library that spans some of my go-to genres like Business, Sales, & Productivity.

Shortform is a concise library in your pocket or on your desktop, I can't recommend it enough.

The first 500 of my subscribers to sign up get a 7-day free trial and 20% OFF an annual subscription!


Friends,

On June 17, 2011, The Motley Fool's flagship newsletter -- Stock Advisor -- recommended buying shares of Apple. At the time, I (Stoffel here) considered it to be an insane choice.

  1. Apple was already one of the biggest companies in the world, valued at $300 billion.
  2. The stock was a 30-bagger over the past decade (see below).

Why would anyone buy shares of a stock that had already been on such a run?

I was making a fundamental error: I thought there were hard limits to growth. My idea of the "law of large numbers" led me to believe something that's grown fast couldn't possibly continue to grow fast. The missing piece for me: technology is erasing these barriers to growth at scale.

Here's what Apple has done since then.

Don't get me wrong: there probably are still limits to growth. But we have no idea where they are. It took well over 100 years for an S&P 500 company to reach a $1 tillion valuation.

It only took 2 years for Apple to reach $2 trillion. Two years later, it hit $3 trillion.

In the real world, companies that can scale quickly and have hundreds of billions in cash (Apple, Google, Meta Platforms, NVIDIA, etc.) are more likely to continue gobbling up market share.

That doesn't mean all of these will continue to be winners. But it does mean that if they aren't winners, it won't be because the stocks have already had a successful run. It will be because -- for whatever reason -- they were unable to execute on the opportunity in front of them.

In a world where these behemoths could have outsized influence for decades to come, that's an important lesson to remember.

Wishing you investing success,

- Brian Feroldi, Brian Stoffel, & Brian Withers

P.S. Need help analyzing a company's quarterly results? Check out this YouTube video we made on how we review quarterly earnings.


One Simple Graphic:


One Piece of Timeless Content:

Do you set cash aside to invest during market downturns or always stay "fully invested"? How We Think About Cash by Chuck Akre provides a useful perspective on how Akre Capital manages its cash.


One Thread:

twitter profile avatar
Brian Feroldi
Twitter Logo
@BrianFeroldi
8:13 AM • May 1, 2024
485
Retweets
3580
Likes

One Resource:

Michael Kitces, Financial Planner Extraordinaire, and Super Investing Nerd is a great read when you want to dive deep into an investing topic. Here are Kitces' thoughts on the 4% Rule.


One Quote:


👋 What did you think of today's newsletter?

🧠🧠🧠🧠🧠 It was awesome!

🧠🧠🧠 It was OK

🧠 Do better


More From Us:

📗 If you've read Brian Feroldi's book, he'd love a review.

👨‍🎓 Interested in learning to read financial statements like Warren Buffett? Check out our self-paced course, The Buffett Method.

🎬 Want a review of popular company earnings? Check out our YouTube channel! Unity, AirBnb, Shopify, Datadog & Palantir earnings videos are now available!


Long-Term Mindset

I teach investors how to analyze businesses. Each Wednesday, I share six pieces of timeless content that can be read in less than 2 minutes. Read by 100,000+ investors from a16z, Amazon, Google, Microsoft, and more.

Read more from Long-Term Mindset

View Online | Sign Up | Advertise Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better. Today's Issue Read Time: <2 minutes Lesson: 5 of the widest moat businesses we know Timeless Content: Why software is eating the world Thread: The best investor you've never heard of Resource: Finding your "Coast FI" number And more! Together with Finchat* Brian Feroldi's Portfolio Statistics Powered by Finchat I (Feroldi here) have used Finchat as my primary stock research...

View Online | Sign Up | Advertise Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better. Today's Issue Read Time: <2 minutes Lesson: Celsius & the importance of expectations Timeless Content: Why founder-led businesses outperform Thread: Warren Buffett's financial 'rules of thumb' Resource: Expectations for companies at 10x sales And more! Master Financial Statement Analysis Learn to read the numbers like a pro Warren Buffett. Peter Lynch. Terry Smith. David...

View Online | Sign Up | Advertise Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better. Today's Issue Read Time: <3 minutes Lesson: Megacaps and AI Timeless Content: A wealth manager's personal holdings Thread: 10-K Diver explains cash versus profits Resource: Ramit Sethi's perspectives on diversified portfolio And more! Together with Incogni: Erase your digital footprint Like it or not, your personal data is more vulnerable than ever. There's an entire industry...