Lessons from the Pros

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Welcome to the Investment Time Machine

We’ve all read those stories about “if you had invested $100 in XYZ Computers in 1980, you’d be a millionaire today.” They are usually part of a pitch for a current penny stock or startup which is described as a similar “get in on the ground floor” opportunity.

The problem is, if you time traveled back to 1980, nobody had ever heard of XYZ Computers and there was no way to know if they’d be more successful than their competitors—same as with that “ground floor opportunity” today.

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That’s why a new feature in the Online Trading Academy Financial Education Center is worth a look. Called the Investment Time Machine, it tells you what would have happened if, instead of buying a product from a company at some point in the past, you’d spent the same amount of money on their stock instead. We think it’s a much more valid yardstick than the “ground floor opportunity” because it refers to a time when the company is already established and marketing recognizable products and services.

For example, in 1964 you could have bought five 12-packs of Coca-Cola for $8.10. That’s a lot of Coke, enough to keep the family going for an entire month. But if you swore off soda, drank water and invested the $8.10 in KO common stock, today you’d have $1,015.

Or suppose you paid $30 for the “Investing for Dummies” book from Amazon in 1996. If you’d actually practiced investing instead of reading about it, and put that $30 into Amazon stock, today you’d have $5,110.

Verizon customers weren’t so lucky. When the AT&T spinoff launched in 1998, landline phone service was $39 a month. If you had decided to wait for cellular and you’d invested in Verizon stock instead, today you’ll have $86… hardly worth calling home about.

One of our favorites is Disney, where admission tickets for a family of four cost $14 in 1962. You’d have done pretty well by just holding onto those tickets, since Disney World/Disneyland admission is far more expensive today. But if you had spent that same $14 on Disney stock, today you’d have $13,463. That’s enough to take the whole neighborhood on the Matterhorn.

The “Investment Time Machine” has other examples from Target, John Deere, Lowe’s, Southwest Airlines and many more. Check it out here.

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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