Why You Probably Cannot Stand to Own Highflying Stocks

Mike Batnick, the research director of our firm, has a wonderfully instructive post up this morning which is a must read: Looking For The Next Amazon.

Its not just Amazon, the same line of thought applies to companies like Apple, Google, Tesla, Netflix, etc.

This has been a theme of ours for a long time. You can own the greatest stocks in the world, but what are the odds you will be able to withstand the horrific downdrafts they all occasionally must suffer? I bet you sold your Apple and Google a long time ago.

We tend to focus on Amazon’s huge 38,000% run, while simultaneously ignoring drawdowns as large as 95%. How many people have the constitution (aka, Who in their right minds) to ride out that sort of volatility?

 

AMZN: Returns vs Drawdowns
Source: Irrelevant Investor

 

Previously:
The world’s greatest stock picker? Bet you sold Apple and Google a long time ago.
Barry Ritholtz
Washington Post, October 4, 2014
http://wapo.st/2i9KQ9g

 

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