It is a none-to-helpful trope to look back at the Big Tech companies that emerged from the wreckage of 2000 tech bubble and consider how much money you could’ve made. If you had invested $1,000 in Apple in December 2000, today you would have $870,000. Rather than rehashing those tropes, this article asks a slightly different question: were there signs at the time that suggested Apple was going to be one of the long-term winners?
It is important that we don’t ignore the survivorship bias in this analysis. For every investment in Apple that could’ve gone from $1,000 to $870,000 there was an investment in WorldCom that could’ve gone to zero. For every successful investment in Amazon.com there was an unsuccessful investment in Pets.com. In hindsight, it’s easy to see why some companies work and some don’t. The challenge for us as investors is to figure it out at the time.
In 2000, it wasn’t obvious Apple would be a winner. Their key customers were the very technology startups going bust, and in the years that followed their new products weren’t sure things.
Reviews of the iPod weren’t glowing initially. Source: MacWorld
There are no perfect stories and no perfect companies, but those investors that looked past those challenges, saw the leadership and the potential and took the risk on Apple were handsomely rewarded.
As we fast forward to today, there are another generation of companies that were slammed in the 2022-23 COVID bubble bursting. Twenty years from now we’ll look back and think similar thoughts about a handful of companies that we think about Apple today. Our challenge as investors is to identify those companies.
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