Question
Amazon and Apple's investment strategies have been largely successful and have had significant implications on the market. Amazon's strategy has been to reinvest its profits back into the business to drive growth, focusing on areas like technology, infrastructure, and logistics. This has allowed Amazon to diversify its offerings and maintain a dominant position in the e-commerce industry. Apple, on the other hand, has focused on creating high-quality, innovative products and building a strong brand. This has resulted in a loyal customer base and high profit margins. The success of these strategies is evident in their contribution to the S&P 500's returns in 2018, where they drove 6% and 7% respectively. The broader implication is that these companies have a significant influence on the market and can greatly impact investors' returns.
This question was asked on:
The reality is most companies and most investments lose money or break even, but a few are big winners. Those big winners are the ones that create value. In 2018 Amazon single-handedly drove 6% of the S&P 500's returns, and Apple drove another 7%. If you owned an S&P 500 index fund in that year, almost 1/7th of your returns came from just two companies. If the number one rule of investing is compounding returns, then the number two rule has to be those tail events create the returns that get compounded.
Receive new free presentations every Monday to your inbox.
Full content, complete versions — No credit card required.
