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(1/6) I decided to backtest the thesis that finding one (just one!) very big winner can offset by far the loses of the remaining losers and beat the S&P500 return. THREAD
(2/6) Characteristics of the test:
Equally weighted portfolio of 10 stocks ($1,000 in each)
Data is based on companies of the S&P500
Period from 1998 to 2018
1 big winner 
$AMZN
9 big losers
Equally weighted portfolio of 10 stocks ($1,000 in each) Data is based on companies of the S&P500 Period from 1998 to 2018 1 big winner $AMZN 9 big losers
(3/6) Lets go with the biggest losers of the S&P500 from 1998 to 2018. Chart belongs to @SeekingAlpha
(4/6) Lets see now our only winner´s performance over the period
Total 20-year return: 11,265%
Annualized return: 26,7%
Total 20-year return: 11,265%
Annualized return: 26,7%
(5/6) Now lets take a look at our portfolio and its performance. Not bad for 9 losers and 1 winner.
(6/6) I thing that this thread reinforces the vision of @FromValue because:
When you look for 10 baggers you just have to be right a small amount of times and it will still payoff
Buying a 10 bagger at a 5% premium/discount will not make that much difference in the LR
When you look for 10 baggers you just have to be right a small amount of times and it will still payoff Buying a 10 bagger at a 5% premium/discount will not make that much difference in the LR
