I’m a shareholder in Amazon.com, Inc. (NASDAQ: AMZN).
It’s a wonderful business, with a very bright future.
And it’s had an impressive growth story over the past 25 years.
More recently, though?
Not so good.
Since August 2020, Amazon’s share price is up a measly 3.4%.
And between August 2018 and April 2020?
Shares were actually down.
So much for the best ecommerce kid on the block, right?
Well, kind of.
See, over the past 4 years, shares are up three-fold.
How is it possible that shares were up a little over one time period, down a little over another, but have tripled in the last four years?
Well, as you may have guessed, I kinda cherry-picked those time periods, above.
But for a good reason.
I wanted to show you how hard it is to time markets.
And how silly it is to use past share price performance to try to guess what’ll come next.
Let’s say you bought Amazon in August 2020?
You’ve made almost nothing. And right now, you might be talking about what a ‘dud stock’ Amazon is.
If you’d bought those shares in August 2018… and held them for 18 months, you’d be cursing the company, your luck, the market…
Now, let me share two other time periods, and show you the full story of the last four years:
November 2017 – August 2018: +81%
August 2018 – April 2020: -5%
April 2020 – August 2020: +78%
August 2020 – November 2021: +3%
Can you imagine being a trader? A short-term buy-and-seller?
Maybe you guessed the right two time periods.
Maybe you got both of the bad ones.
Maybe one of each.
Or, you could have bought and held.
In four years, you’d have tripled your money.
You just had to bear long periods of going nowhere, in the process.
Was Amazon a wonderful company when the share price was going up, and then suddenly a dud one when the share price went nowhere?
Of course not.
It’s just that the market is, well, not always sensible.
If you’d have been told in November 2017 that the next four years would triple your money, you’d happily endure long periods of stagnation, right?
So what will you do from here? And not just with Amazon, but in general?
Buy, fret over short (or longer) periods of share price stagnation, and maybe sell?
Or buy shares in quality businesses at decent prices and be patient?
I hope the Amazon example has helped you decide.