Wouldnât it be nice to see a share price jump, in a single day, by more than the price you paid for those shares?
(Motley Fool co-founder David Gardner calls it a âspiffy popâ!)
It happened. Yesterday.
I want to tell you that story.
And itâs one that – spoiler alert – makes me look good.
Now, despite the fact that I âput myself out thereâ (as the cool kids say) via these articles, plus radio and television appearances, you need to know two things about me:
1. Iâm hugely introverted; and
2. I cringe at even a hint of self-promotion or self-congratulation.
Why do I do all of this, then?
Because, despite that, I truly want to help people improve their financial position and prospects.
And this job gives me that opportunity.
(Also, because there are some scumbags out there, and if I can provide a counterpoint, then Iâve hopefully done something worthwhile.)
So⦠letâs get some other stuff out of the way, first:
Iâm no genius.
I make lots of mistakes.
My failings are legion.
And Iâve had very few truly original investing insights.
Now, letâs assume the first three of those are self-evident.
The fourth is just objectively true. See, thereâs nothing truly new in investing. There hasnât been for decades.
There are new versions of old stories, but the basics have been the same.
(If someone is trying to sell you a new way to get rich… you’d been warned!)
So, if and when Iâve had success, itâs usually just by sticking faithfully to what we know works, rather than reinventing the wheel.
And, luckily for me, thatâs been enough to deliver good gains for our members.
So⦠this isnât about me at all, really.
Itâs a story of basic investing principles, faithfully applied.
Aaaaand, with the focus neatly diverted from me, on with the storyâ¦
Way back in 2012, the investing advisory service I run, Motley Fool Share Advisor, released our monthly recommendation.
It was a travel management company, focussed on business clients called – unsurprisingly, Corporate Travel Management Ltd (ASX: CTD).
On the day of the recommendation, CTM shares closed at $2.26.
Yesterday, on the back of the announcement of a contract win, those shares jumped by $2.28 each, closing at $21.18.
And adjusting for dividends, the cost base on our scorecard for that recommendation is actually now $1.90.
So, yesterday we had a one day gain that was greater than the share price on the day of recommendation.
And, the share price is now more than 11 times our recommendation cost base.
(I also own shares. But, as is our practice, we let members go first. So I canât quite claim those same impressive stats, because I bought at a slightly higher price. But I’m not complaining —Â Iâve also done well.)
Another reminder, before we go on â Iâve made some bad mistakes, too! Not every recommendation does as well as CTM!
Why am I telling you all this?
Just another garden variety humblebrag? Or a not-so-humble-brag?
No. In fact, Iâd rather not be writing this at all.
But I am, because theory is one thing.
Practice is another.
I can tell you all about how good I think investing is, and can be.
I can talk about a hypothetical future âyouâ that has a comfortable retirement thanks to the power of compounding.
And youâll read it and understand it, absolutely.
But thereâs nothing like being able to back it up with, as the TV cooks say, âHereâs one I prepared earlierâ.
See, the ASX has been pretty volatile of late.
Moreso if you own growth companies.
Doubly, if they were hit by COVID.
Itâs tempting to look only at the recent past and wonder if this investing thing is really worth it.
Or if shares will ever regain their mojo.
Now, I canât make promises. Iâm not allowed to, and itâd be irresponsible, anyway.
But what I can do is show you how things have worked in the past, and tell you that I see no reason why the future should look any different.
(You think itâs âdifferent this timeâ? Theyâve been saying that every year since 1900!)
I can tell you that the $2.28 per share company is now selling for $21.28 at the time of writing.
I can tell you that, in between times, it went to $12.50 in 2015, then back to $8.90 later that year.
It hit $31 back in late 2018, then fell to $5.50 in March 2020.
It was $26 back in April 2022.
And dropped to under $15 last December (more on that in a bit).
And now itâs back to $21.28.
Did I mention share prices are volatile?
Ah, youâre wondering, why didnât I sell at $31 and then fill my boots at $5?
Because you have the one thing I didnât have at those times: the benefit of hindsight.
But also, I want to remind you that weâve earned an 11-bagger for our members (11 times their money!) without fancy trading or the hubris of thinking we knew what came next.
We just did the stuff I mentioned earlier â the basics of good, long term investing.
And thatâs it.
And itâs why Iâm sharing this story.
Am I proud of that result? You bet.
But itâs truly not about me.
Iâm stoked for our members.
And Iâm pleased that I can share a real world example of the power of investing.
Not trading.
Not tea-leaf reading.
No charts, no fancy algorithms. No obsessive following of share prices. No expensive ‘trading systems’.
Investing.
Buying with the intention of holding for the long term.
Holding, even when it hurt.
Because we believed in the future of the business.
Oh, and the bit I mentioned above?
Last December, with the share price under $15, we recommended our members buy more.
Because sometimes, the best company to buy is the one you already own.
Members who followed that recommendation are up 45% or so.
Iâm stoked for them too.
Because it can be hard to buy when shares are down. When the market is in the dumps.
But thatâs when we need to focus not on the market or its moods, but on the business.
Not every investment goes this well, as I said.
Some are mediocre.
Some just plain suck.
But done well, finding just a few winners like CTM (and others) can deliver a very healthy long term gain.
Me?
Iâm just standing on the shoulders of giants.
Graham. Buffett. Fisher. Lynch.
Theyâre the GOATs.
Not only for their approach to business analysis, but for their mastery of behavioural psychology.
In fact, Iâd wager the latter is more important than the former.
So Iâm not reinventing the wheel. Iâm no uber-visionary. And Iâm rarely the smartest bloke in any room.
But, if I do the basics well, I have a strong belief that itâll turn out very, very well over the long term. CTM is just one example.
And I have a strong belief that the same can be true for you, too.
Here’s to compounding. To long holding periods. To riding the waves of volatility.
And, to the long term benefits of compounding.
Have a great weekend.
Fool on!
The post 11 times your money? Yes, it’s possible (we did it) appeared first on The Motley Fool Australia.
Should you invest $1,000 in Corporate Travel Management Limited right now?
Before you consider Corporate Travel Management Limited, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Corporate Travel Management Limited wasn’t one of them.
The online investing service heâs run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
See The 5 Stocks
*Returns as of April 3 2023
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Motley Fool contributor Scott Phillips has positions in Corporate Travel Management. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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