Picking up where I left off in Part 1, I have an investment hypothesis that the best value can be found in stocks of good companies that have experienced some type of set back or obstacle. Companies that make a valuable product, but they need to overcome that set back to achieve their full potential. Here are two more stocks that have fit that pattern in the past.
- Netflix (NFLX) – I was a very early adopter of Netflix, I have been a member going back over 10 years. While I will commend Netflix on an excellent product and fantastic service, over the years the company has irked me with price hikes, sometimes several hikes in the same year. Back in 2005 I was just about fed up with the red envelope and their price increases, when I discovered that Blockbuster was offering a competing service. I decided to jump ship and I hated it. Still the threat of Blockbuster entering the fray scared investors. Realizing that Netflix offered the superior product I should have scopped up a bunch of their stock and I could have gotten some for $14 a share with a $10,000 investment. Today those 700 shares would be worth $225,000! That’s a house!
- Apple (AAPL) – Apple stock over the last 30 years has been a roller-coaster,a wall street darling in the 80’s that almost went bust in 2000 and rallied back to be the most valuable company in the world today. Back in 2004, based on the success of the ipod I thought about buying a few shares. A friend of mine talked me out of it and boy was he wrong. I could have gotten those shares for $25 a share and after a split and some dividends I would have about 422 shares. Those shares would be worth over $2,000,000 today! If you are smart that is and early retirement.
So there you are, four superstar stocks that I thought about investing in and failed to do so. In my failure to act I left a small fortune on the table. Am I mad? No. Really? Of course I am disappointed, but my thinking is this, I missed those opportunities, but what’s done is done. New investments are out there and I need to focus my thoughts and energy towards finding them and I think I have found one. The next big one? Perhaps, I believe so, but only time will tell.
Before I disclose my next investment idea I would like to state the following fact, I am not an investment professional. I am explaining to you what I am doing, I am not telling you how to invest your money. It is entirely possible that I am wrong and you will lose your investment. Its also possible that the stock market will crash again. Our economy is not very strong and our leaders are not very bright. Anything can happen and a lot of the potential outcomes are bad. Investments come with risk and you need to be aware of the potential for loss.
With that said and without and further delay, my next investment is going to be Microsoft. If you look at their stock it has been a snoozefest going all the way back to 2000. My question is, why? Every PC in the world runs on windows, so do most servers and a good number of phones. They have an internet browser, a search engine, and a gaming colsole. Why isn’t Microsoft as big as Google or Apple? Sure Bing isn’t as good as google, and their Zune music player failed, but the potential is there.
The current CEO is stepping down and with the right direction and leadership Microsoft could be ready for some big ideas. Improve the search engine, overhaul internet explorer, perhaps create a phone. With the size and quality of their talent pool the possibilities are limitless. I see a tremendous amount of potential just waiting for the right person to come along and unlock it.
My aim is took take a portion of my overtime pay and use it to but a few shares every month. I don’t see the stock moving much until the new CEO is selected, which won’t be for a little while. I am hoping to get 6 months of investing in before that happens. I will keep you posted with my progress and we can see how this investment hypothesis works out.