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On January 2, 1998, armed with $611 and a dream, our fearless, fortunate, and fake investor put all of his proceeds from a successful outing in Yahoo! (NASDAQ: YHOO) into a little online bookseller called Amazon.com (NASDAQ: AMZN). It was another fresh pick, having had its initial public offering in May 1997. The stock was trading at $5.00, allowing for the purchase of 122 shares. The year that saw the debut of Sex & the City and the first album by a young and innocent Mouseketeer by the name of Britney Spears also saw Amazon go on quite a tear. In April 1998, Amazon bought the Internet Movie Database, a consistently visited spot for fans of television and movies. Later that year, AMZN snatched up calendar/address book/reminder service PlanetAll and data-mining concern Junglee.com. Over the course of the year, especially during the final quarter, AMZN shares zoomed higher.
By the end of December, AMZN had increased nearly 10-fold in value and was trading at $53.54, a 971% return. The $611 portfolio from 12 months earlier was now at (roughly) $6,532.
Next: Step 3: Qualcomm (QCOM), 1999
Beth Gaston Moon is an analyst at Schaeffer's Investment Research.
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Reader Comments (Page 1 of 1)
8-30-2007 @ 12:41PM
David Benavides said...
Hello
I just read your example with Amazon, investing $100.00 and turning it into a billion dollars. I would like to know how I can do the same thing in this present day? Thank you for your help.
Sincerely,
David Benavides
8-30-2007 @ 1:58PM
Kenny said...
It's a nice theory, but it does not add up. There are tax consequences every time you liquidate a stock with a profit. So, you wouldn't be investing the total amount. It would take a lot longer then ten years.