I continue on my journey of reviewing old stock picks and calls from 2007. This was back when I thought I could become a stock picking and market timing genius using AI. I was wrong to think that way and this serves as a reminder than long term investing is really the key to success. There will always be companies that will perform really well over time and then they start to fizzle out as a CEO or management changes. Maybe the made some bad calls or had some bad strategy? Who knows. It’s quite come for the leaders to become laggards, and some laggards to become leaders. That’s the stock cycle for you.
I start out with Google (GOOG), the one that got away. Back in 2007, it was trading around $465 per share. It was pricey and extremely over valued. At the time the PE ratio was probably in the triple digits.
Fast forward to today, and it’s trading at $1,162 per share after a few stock splits to boot. Not bad if you held it for 12 years, right? Hindsight is 20/20 and this stock could’ve tanked.
GE was one of those darling conglomerate stocks that was in everyone’s pension fund and mutual funds. It did really well and paid a generous divided. Here she was trading at $37.50.
Fast forward today, she’s sucking wind at $10.00. GE’s CEO retired and they had lots of mis-steps in strategy. The markets punished the stock as they work hard to do a turn around. I might just pick up 100 shares and forget about them. It’s a small risk but someone’s got to do it for the long term.
Noble Drilling Corp, what a disaster that turned out to be. I vaguely remember lawsuits and some kind of improprieties with this stock. Here she’s trading north of $88 per share.
Now she’s at $2.00. Enough said.
Last, but not least is IYR the real estate ETF. This one took a beating during the 2007/2008 real estate crisis because it was mostly driven by stupid sentiment and MBS products. Here’s she trading at $88ish and I made the comment about the trend breaking. Little did I know that the real estate crash was about to happen.
Fast forward 12 years and IYR has just about recovered. I guess that’s good but I’m still worried about how strong the Real Estate market is in this country. I see open houses every Sunday all over the place here but no one is buying at the list prices. Here’s IYR trading at $87ish.
Moral of the Story
The moral of the story is that you’ll never really know if you’re right when stock picking for the long term. Everyone said that real estate is a safe bet but we all know how that ended in 2008. Bellwether stocks like GE can go from leaders to laggards relatively fast and new technology companies like GOOG can make you insanely wealthy.
So I go back to what I’ve written about before. The markets are rigged and long term investing wins. Only if you do it right.