Asked on 14 Aug 2018
How do I spot potential in companies/industries?
Statements as such have imbued logical fallacies in them, known as "connecting the dots backwards". Its very easy to look back and claim you saw it all coming, but its not often the case. There are more than 1000s of IPOs worldwide yearly- of which less than a 1% have made it big to FAANG levels. If u search online, there are plenty of articles going along "if I have invested in $100 in apple/google/amazon/facebook when it IPOed, it would be worth more than ~100x multiples of that today." The truth is if you indeed bought a stock at say $100, you would have likely sold it even before it shot up to 10 or 20x multiples. Even if you did buy stocks for the long term(10 year horizon), chances are, investors would not have picked a winner close to success like FAANG.
Honestly speaking, much opportunities often come only in China or U.S. where the market size is so huge - giving a long runway for them. In addition, investors there are more growth-oriented (Tesla and Amazon can keep making losses but still crack all time highs) while Sg-investors focus more on valuation and income.
Thus, go for stocks there. You can go for those famous brands but still not as famous as the FAANGs, like spotify, shopify, IPG Photonics Corporation, JD etc.
I believe we never can spot them. There is 'survivor bias'. So many listed companies default. As s start up they often are held in Venture Funds, even after listing competition is strong. And in the end every business rises and then declines (secularly).
I had a crystal ball:
Meituan Dianping, recently.
Tencent, 8 years ago.
Missed out on Alibaba as I didn't have a proper brokerage account back then.
As shared by another community member - US and China are the better markets to invest in + if the companies are operating there, predominantly.
For some alpha returns, frontier markets but you gotta have a long long time horizon and a strong belief in the founding/management team.
So to be clear, you would have held on through this?
52-wk high - 968.99
This is ONE year. If you would have held on to Tesla through 8 years of 100%+ standard deviation, you have a special type of risk tolerance that most investors don't. So these kinds of statements are not usually helpful as you can't predict the future.
Honestly, it is very hard to find this type of multi-baggers, you will really have to dig through the market to uncover these gems. You can start off by looking at the US and China market as both of them are global powerhouses and should serve as a starting point for you.