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Clay reviews Thomas Phelps’s book – 100 to 1 in the Stock Market, and also highlights writings put out by Akre Capital Management.
▶️ RELATED EPISODES:
– 100 Baggers: Stocks that Return 100-1 w/ Chris Mayer:
IN THIS EPISODE YOU’LL LEARN:
– Common characteristics of companies that increased their share price by 100x.
– Why most investors aren’t able to hang onto their winners as Phelps suggests.
– Why good stock selection is much more important than good stock market timing.
– Mental models Phelps uses to figure out the odds when investing.
– Why we should invest with companies that align with our own values.
– When to look for potential 100 Baggers.
– The four categories of companies that were 100 Baggers in Phelps’s study.
– Who is best equipped to be individual stock pickers.
– Chuck Akre’s three-legged stool approach.
– Takeaways from two of Akre Capital’s brilliant articles – ‘Why Compounding is so Difficult’ and ‘The Art of (Not) Selling’.
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🖊️ Access the transcript and learn more about the guest here:
📖 BOOK MENTIONED:
– 100 to 1 in the Stock Market by Thomas Phelps:
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Investing in the stock market has been a popular way to create wealth for generations. However, some investors hope that they can achieve 100x returns through buy-and-hold investing. Is this goal feasible?
“100 to 1 in the Stock Market” is a book by Thomas W. Phelps, which has gained a reputation as a classic in the investment world. This book tells the stories of investors who have made a fortune by investing in stocks that had exceptional growth potential.
Phelps argues that finding growth companies can lead to massive returns of up to 100x the initial investment. While this idea may seem far-fetched, Phelps supports his thesis with numerous examples of investors who have achieved these returns through buy-and-hold investing.
One of the most famous examples mentioned in the book is Warren Buffett. Buffett started investing in the stock market at the age of 11, and through buy-and-hold investing, he has become one of the richest people in the world. He was able to achieve this success by investing in companies with exceptional growth potential and holding on to those investments over the long term.
It is important to note that not all growth stocks will achieve 100x returns. Phelps suggests that investors should focus on finding companies that have a competitive edge in their industry, a strong financial position, and a potential for long-term growth. These companies may not necessarily be well-known and can require extensive research and analysis.
While the idea of achieving 100x returns through buy-and-hold investing may seem alluring, investors need to remember that this goal is not guaranteed. The stock market can be unpredictable, and even the most promising companies can face unexpected challenges.
Furthermore, Phelps suggests that investors who aim for these returns should be willing to hold on to their investments for the long term, even during periods of volatility. This approach requires patience, discipline, and a strong conviction in the company’s potential.
In conclusion, 100x returns through buy-and-hold investing are possible, but not guaranteed. Investors should focus on finding growth companies with a competitive edge, a strong financial position, and a potential for long-term growth. The approach requires patience, discipline, and a strong conviction in the company’s potential. As with any investment strategy, diversification and risk management are also crucial. The book “100 to 1 in the Stock Market” provides valuable insights into the world of buy-and-hold investing and offers a useful roadmap for investors looking to achieve exceptional returns in the stock market.
You’re completely misunderstanding what Phelps was saying. He meant look for those industries when they are born. Not now…
Google absolutely had competition. Acting like it was obvious now is just anachronistic.
This is good stuff but one contradiction is the idea that we’ll known stocks should be avoided. That doesn’t make sense given a) the list of 100 baggers and b) your admission that a lot of them are consistently valued highly.
Can you clarify on this?
Thinking there isn't much money to be made if you have the same 4-year growth forecast as the market is short sighted – unless you have no interest in 100 baggers – which don't happen in 4 years! If you are hoping to own shares of a company for decades, the 4-year forecast is almost meaningless. Also, truly great companies are very rarely priced at or below their intrinsic value, with the rare exceptions being during extreme recessions like 2008 or market panics like 2020, and the "reasonable" prices you can get then are likely two or three times higher than the "expensive" prices you could have bought them for a few years earlier. I'm in my 70s and started investing in my teens. I have made only two mistakes in that time 1) not buying companies I believed were great companies because the price was "too high" and 2) selling (anything, ever). Of course I made those two mistakes over and over and over again. Many of the companies I thought at the time were great companies eventually turned into 20 and 30 baggers or more (only a few 100 baggers, not counting Berkshire Hathaway, which I always thought was too expensive). The prices I thought were too expensive were ridiculously cheap in retrospect. Also, very, very, very few of the stocks I ever sold are now priced lower than where I sold them.
Please relax before records or allow yourself to speak higher/more freely/less controlled/ natural in melody. We will generously overlook fillers/terms and whatever. There are so many breaks/cuts and each sentence ends with a "downwards melody". It really sounds like a self programmed sounds bot, who plays prefab sentences. It prevents me from further listening despite the content sounds interesting. Cheers
41:27 Chuck Akre
50:21 When to sell
Great Episode! I rushed into my audible app and bought the audiobook, thanks.
This kind of content should have a lot more listeners. But instead 'investors' flock to the thousands of popular channels talking about macro, fed, inflation data and short term trading.
Jmia could 100x
Potential 100 baggers – $BYND and $AMS.
$ORGN – 100x bagger remember this post