I am removing Facebook from the list and adding CrowdStrike. With that in mind, as is my tendency (and was stated in my last post), I am continuing to recommend 5 of the 6 stocks from last year: Tesla, Zoom, Amazon, Stitch Fix and DocuSign. So, as I go through each of my 6 stock picks, I will discuss what that might mean for each company. To some extent, over a 5-year period or longer, stock appreciation is correlated with a companyвЂ™s growth. Of course, IвЂ™m always fearful but sticking with great companies has worked out so far and trying to time when to sell and buy back those companies often leads to sub-optimization. Given that our picks were up an average of 259% last year, IвЂ™m back to a fearful mode that 2021 might be that period. In our last post of 2020 we outlined the thinking process to select great companies, but even great companies can have some periods where their returns are below par.

The wonder of compounding is quite apparent in the table, but it also shows that patience is a virtue as holding the stocks of great companies longer can multiply your money significantly over time, while too many investors become inpatient and sell prematurely. Since the S&P has had compound growth of 10.88%/year for the past 7 years, and Soundbytes has been at 55%, I thought you might find it interesting to see how long a double takes at various levels of IRR and what multiple you would have after 10 years for each one. At that rate one would double their money every 3 years. In last yearвЂ™s Top 10 list I pointed out that my target is to produce long-term returns at or above 26%. They both have been on our recommended list every year since but this is about to change. The two stocks that have been on the list every year, Tesla and Facebook, were at the end of 2020 at 77X and 11X, respectively, of the price I bought them in mid-2013. In the seven years we have been offering stock picks on this blog this strategy has worked quite well as the cumulative gains for my picks now exceeds 21X and the 7-year IRR is 55%.

I wanted to start this post by repeating something I discussed in my top ten lists in 2017, 20 which I learned while at Sanford Bernstein in my Wall Street days: вЂњOwning companies that have strong competitive advantages and a great business model in a potentially mega-sized market can create the largest performance gains over time (assuming one is correct).вЂќ It does make my stock predictions somewhat boring (as they were on Wall Street where my top picks, Dell and Microsoft each appreciated over 100X over the ten years I was recommending them).

Road rash 3 soundbytes