The Power of Slow Burner Investments

The greatest tool any investor can use is time itself, with Apple serving as the perfect case study for the importance of using patience when investing

Many new investors may find themselves sucked into the world of fast-paced, get-rich-quick schemes that Hollywood portrays in the likes of ‘The Wolf of Wall Street’ and ‘Limitless’. However, the real secret ingredient to creating a successful portfolio is time itself. 

Don’t believe us? Well, maybe you’ll take the word of the ‘Oracle of Omaha’ and Berkshire Hathaway (NYSE: BRK.B) CEO Warren Buffett: 

“The stock market is a device for transferring money from the impatient to the patient.” 

Buffett himself is among the richest people on the planet, worth roughly $72 billion as he approaches his 90th birthday. Buffett began investing at 11 and was worth $6,000 by his 15th birthday. He made his first million by age 30, and finally hit the $1 billion mark at 55 years old. That means that more than 99% of Buffett’s wealth was accumulated after his 55th birthday.

With that thought in mind, it’s time to look at the power of slow burner investments. 

The case study of Apple stock

It would be very easy to single out a number of stocks that represent the power of patience, including Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), and the go-to for new investors: Netflix (NASDAQ: NFLX). 

However, it is Apple (NASDAQ: AAPL) which represents the greatest ideal for patient investing since it first IPO’d in 1980 at $22 per share. It has grown more than 43,000% since its IPO for $22 a share in 1980 (adjusted for stock splits), which would bring in roughly $15,500, as of March 11, 2020. Not a bad return over 40 years for $22 eh? You don’t need to be a Wall Street mogul or have deep pockets to fork out $22. 

If you’re not sure what a stock split means, check out this article: 

It wasn’t all smooth sailing though. Between 1990 and 2000, the company was in turmoil and facing a long road to profitability. Then the company brought back founder Steve Jobs and everything changed. 

Now let’s say you had invested $100 in Apple upon its IPO, it would now be worth roughly $68,000. If you had invested $1,000 in Apple when it IPOd, you’d be sitting on around $651,000 today.

The importance of patience and diversification

Now you have seen why patience is so important, but you also need to diversify. 

Let’s play with some more hypotheticals here. Apple isn’t even the best tech growth story out there. A $100 bet on Amazon (NASDAQ: AMZN) at its 1997 IPO would net you more than $130,000 today. Meanwhile, a $1,000 Adobe Systems (NASDAQ: ADBE) investment in 1986 would return just under $2 million today. 

That would be a lot of money from just 3 investments. But of course, not every investment is an Amazon or Apple, and not everyone bets on a fresh-faced IPO. 

That’s why diversification is so important. By splitting your portfolio between at least 12 different companies, across 6 unique sectors, you are all but shoring up your portfolio against an economic downturn and giving it the best opportunity to grow. 

With such a range of investments, you are banking on your winners outperforming your losers, and when you follow our 6 Golden Rules, you’re sure to be on to a winning formula. Or you can just let us whittle down the U.S. stock market’s 3,000+ listed public companies into one market-beating shortlist.

See for yourself how we consistently beat the S&P 500 (NYSEARCA: VOO):

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in stocks mentioned above. Read our full disclosure policy here.