If you’re ever on Facebook, and you know that most of you often are whether you admit it or not, you often see people post old photos of themselves and friends from decades ago that they’ve scanned. I chuckle at some of my old fashions (and, yes, haircuts), and it’s interesting to try to remember who you were and what you were doing when you see yourself tagged in one of those old photos.
When it comes to investing, I spend a lot of analysis, articles and thought process on doing exactly that — trying to remember who you were and what you were doing in past cycles that I’ve lived through on Wall Street. So today, I have a special edition of The Cody Word — Stock Throwback Thursday.
(Stock Throwback Thursday) 1998: Remember when KTLI popped 500% in one week after they announced they were going to start a website where you could buy KTEL records? I remember reading retail investors’ comments on message boards that would explain to any doubters that they just didn’t realize how big the online opportunity for record and music sales was going to turn out to be. What could go wrong by throwing a little bit of money in front of that kind of a train before it leaves the station by buying a much cheaper stock than Amazon, which was clearly already the leader in retailing stuff online?
Pets.com was similarly flying high because “pet supply sales online were exploding as people were just finally learning about how to go online to shop” or something along those lines. They were right!
But guess what. You had to buy the best-run, largest-cap, retail Internet stocks like eBay (EBAY) and Amazon (AMZN). Fast forward to today, and every day I get comments from retail investors who want to invest in the growth of legalized marijuana about “what could go wrong by throwing a little bit of money in front of that kind of a train before it leaves the station by buying crappy, hyped up pot penny stocks. You see them on all of my recent articles about why investors who want to invest in the legalized marijuana revolution should only buy the best-run, largest cap water and farming infrastructure companies like Lindsay LNN and AEGN. See what happened to KTLI in the chart below. Pets.com is gone too.
Here’s another. (Stock Throwback Thursday) 2001: Homegrocer.com goes public to tepid response. Remind anybody of $KING ‘s recent IPO? But I thought online grocery delivery in big cities would be HUGE! What could go wrong by throwing a little money in front of that kind of a train…wait a minute. Maybe we should learn from history.
Your money, your capital, especially if you don’t enough of it to be comfortably investing in disruptive and long-term growth big cap stocks is too precious to gamble on a game that’s fixed against you. Yes, marijuana and apps are growing and going to get huge and there are and will be revolutionary and disruptive companies and technologies to continue to invest in to benefit from those trends. But buy only the best of the best in those industries. Not the K-Tels, Webvans, and Pets.com’s of the marijuana and app world, ok?