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It’s a portfolio strategy... Let’s say 2 or 3 out of 10 don’t fail. You want to quickly figure out who those 2 or 3 are, and then take your 25k investment and make a 100k investment in those 3. -- Jason Calacanis, interview with AngelList
Him: "But wait! Can the stock market even deliver such returns?"
I'm on my feet now, pacing in the room back and forth between the blackboard and my laptop. He doesn't give me a chance to respond: "Has it ever been done? Has anyone achieved 1000X return in the stock market in less than a decade, without just getting lucky?"
I didn't even look up. I went back to my laptop, fired up the stock screener and sorted the stocks listed on the U.S. stock markets based on their total 5-year and 10-year returns (dividends and all included). I filtered out the weirdo penny and micro-caps and weeded out the companies that are not actively traded. Right on the top, was the king of entertainment, Netflix, with a total 10-year return of 6,960% return. That's about 70X return on your investment in the past ten years. In comparison, S&P 500 index grew by approximately 2X in the same 10-year period. And Netflix is not alone. There are many others on the list. Well-known names such as Amazon and Momo to name a few.
He said: "That's nowhere close to 1000X..."
I'm holding my hands in his face "True! But, when Jason invests, he deals with a lot of uncertainty. So many things could go wrong with a startup. The founder may give up. The team may not be able to execute. They may fall off track and only inform Jason when it is too late. Lack of information and data about his investments makes his job so much harder than a stock market investor. That's why it is possible to make such impressive return. He takes risks in the face of uncertainty, and he harvests his well-deserved rewards."
I continue: "That's an advantage for us! The advantage a stock market investor has over Jason is having access to a wealth of data about each publicly traded company. Quarterly and annual earnings calls give us a wealth of information that Jason never has access to."
Now, if we take advantage of having access to a lot more data about our investments and combine that with the emotional stability and calmness Jason applies to his investments, we should be able to effortlessly grow our investments by 10X, if not more. This is much lower than Jason's 1000X, but we are also taking a lot less risk. And, 10X return in 10 years beats the hell out of investing in S&P 500. With all that in mind, we set out to start a new investment theme inspired by Jason Calacanis and we shall call it:
The league of 10Xer stocks:
The goal of 'The league of 10X stocks' is to invest in companies that have the potential to grow by about 1000% in a decade or less. Looking back at the companies such as Amazon and Momo which were able to do that in the past 5 to 10 years we know that such companies must have a few characteristics:
The first three candidates to start the league of 10X stocks are above. As we add new Stock Cards, we will keep an eye out for new 10Xers. You can be a part of the league too. Submit a Stock Card request for the stocks on your radar that have the potential to grow 10X.
What has been on our radar?
Before we wrap up, we wanted to thank Mark B., Raffaello S., Sam K., Larry Y., and Bradley T. from our user community who submitted Stock Card requests this week. Take a look at these Stock Cards by clicking on their logo: