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10 years to $1 billion: How it was technically (if not logically) possible

Posted Aug 30th 2007 8:00AM by Beth Gaston Moon
Filed under: Amazon.com (AMZN), Market matters, Sears Holdings (SHLD), Rich in America, Akamai Technologies (AKAM), Personal finance, SanDisk Corp (SNDK)

Coulda, woulda, shoulda. If you'd only bought Apple Inc. (NASDAQ: AAPL) shares back in 2003 when they looked downright pathetic. If you'd just dumped your tech stocks in March 2000. If you'd taken the chance on that IPO that earned your high-school boyfriend hundreds of thousands (maybe that's just me).

What if you'd had the crystal-clear foresight (provided only by a crystal ball) that would have allowed you to invest everything in one of the top-performing stocks, each and every year, for 10 years running? The answer -- and it's no exaggeration -- is that an investor who played the game perfectly, beginning with a mere $100 in 1997, would now be a billionaire.

Starting with a basket of hundreds of large-cap stocks (similar to the makeup of the S&P 500 Index) and the benefit of 20/20 hindsight, my loyal data minions at Schaeffer's Investment Research were given $100 in virtual money to invest in the first trading day of 1997. Taking this cash, they invested in what would grow to become the top-performing equity of that year. The original $100 plus the proceeds earned in 1997 were rolled into a new position -- the one that would prove itself as the top pick of 1998. And so on and so forth through the end of 2006.

There was only one repeat on the list -- Akamai Technologies (NASDAQ: AKAM), which outperformed all of its large-cap peers in 2003 and 2006. To keep things interesting and varied, we rear-view-mirror-invested in the second-best stock for 2006.

In this package I reveal what the best stocks were, how they performed, and how the portfolio grew exponentially over the years. This exercise proves it's darn-near impossible to possess the skills to turn $100 into a billion in 10 years. To make a January 2 selection of what will go on to be that year's top equity and then repeat the feat 10 times is unattainable. Not even a 21st-century Nostradamus would be able to accomplish it

Still, it's fun to imagine and to reflect: Who would have known Sears Holdings (NASDAQ: SHLD) would top the charts in 2004? Was SanDisk Corp. (NASDAQ: SNDK) really an easy pick? And what about Amazon.com (NASDAQ: AMZN) in 1998? Okay, maybe some astute investors could have seen that one coming.

Step 1: Yahoo! (YHOO), 1997

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Seeking your own fortune? Also see Georges Yared's 25 stocks for the NEXT 25 years

Tags: AKAM, Amazon.com, AMZN, featured, investing, portfolio growth, PortfolioGrowth, SanDisk, Sears, SHLD, SNDK

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