Missing out on a big investment opportunity can make it tempting to chase the next one. Before you do, it’s important to understand how that decision fits into your overall financial plan.
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AJ, in my adult life, I can look back at several missed opportunities to buy into what, in hindsight, looks obvious now, whether it was Amazon or Apple or Google or whatever.
Is it too late now? That’s a good question. I think in the case of those three stocks, you’re looking back 20, 30, or 40 years at some of these things. Are they going to post 2,000% rates of return over the next couple of years? Probably not.
But the reality is you’re buying high-quality businesses that are well diversified and vertically integrated in virtually every industry in the world. So there’s maybe some safety there.
But I think what you’re getting at is some of these smaller things that have rallied 100% or 200% in a year, and you, as an investor, are looking around thinking, “Is there still some upside here? Can I speculate is this a business that I could buy?”
And what this ultimately comes down to, as an investor, is you need to understand the margin of error that you have in your plan. If you’re going to put $3,000 or $30,000 into a stock, can you afford for it to go backwards by 50% or 80%?
So I don’t think it has as much to do with which individual name you’re looking at. It more so comes down to could you afford to make a big mistake on one particular thing.
This really comes down to your personal time horizon and circumstances and building portfolios to fund plans and goals? Yeah, that’s the most important thing.