Still too many people who want to invest for the long term believe that the stock price tells them a very important story. Sometimes, it does, but often it doesn't, especially not in bear markets.
Let me give you a prime example.
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1/5
Let me give you a prime example.
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1/5
We all know what happened during the dotcom bust. The #NASDAQ dove almost 80% and many companies even more. A prime example is of course $AMZN, down more than 90% from its previous all-time high at a certain moment.
2/5
2/5
So, without knowing which are these, which one would you have chosen based on price action from 1999 to 2001?
I think we can agree that it's the light-blue one. Especially if you know something more about this stock.
3/5
I think we can agree that it's the light-blue one. Especially if you know something more about this stock.
3/5
Your choice would even become more obvious if you look at the period 2001-2004, in which the light blue stock rose more than 600%. It was very profitable, unlike a lot of other dotcom stocks. What's not to like, right?
4/5
4/5
Now, look at the return from January 2005. The light blue stock was $EBAY, the orange $AMZN and the dark blue #NASDAQ
I know that $AMZN is an exception but I just wanted to show the future is not as certain as some think and short-term price action does not mean that much.
5/5
I know that $AMZN is an exception but I just wanted to show the future is not as certain as some think and short-term price action does not mean that much.
5/5
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