šŖ¦ My biggest investing mistake ever
$5,000 poorly invested
Welcome to the 10th edition of this exclusive behind-the-scenes newsletter.
Last week, I told you about š Two Engines Behind 100-Baggers.
Today? Letās talk about ā ļø A big investment mistake I made. A mistake you should avoid at all costs.
You want to join Tiny Titans on the 9th of June? Discover here whether Tiny Titans is something for you.
Dear Partner š
In 2018, I played a game.
15,000 people each started with a fictional $50,000 to invest.
Whoever made the most profit after 10 weeks, won.
Out of 15,000 peopleā¦ I won.
I won a cash price of $5.000.
$5,000 was a lot of money for me back then.
I was still a student.
While waiting for the price money to arrive, I decided to do my homework.
I would fully invest that $5.000 right away.
At age 23, I realized that $5,000 could grow into $4.8 million if I compounded it at 10% per year until age 95 (Warren Buffett's current age).
After a week of research, I decided to buy the Belgian company Lotus Bakeries ($LOTB).
The price money was just enough to buy 2 shares of Lotus Bakeries (stock price: ā¬2.500).
I knew Lotus Bakeries was a great company.
A company that ticked all the boxes for a Tiny Titan stock.
But the payout of that price money took a while.
It made me hesitate.
I started to overthink stuff.
In the meantime, I spoke with other investors.
And everyone seemed to agreeā¦
Lotus Bakeries?
A great company. But it might be a bit too expensive.
The company traded at 28x earnings in 2018.
So I decided to temporarily buy a different stock.
I would wait until Lotus Bakeries became cheaper.
What I bought instead?
The food company Ter Beke. Today better known as Whatās Cooking.
I only owned Whatās Cooked for a short period of time. But it wasnāt a great experience.
And actually, I could have seen it coming.
The companyās track record was poor.
Long story short: my price money was poorly allocated.
Shame on me.
But it gets even worseā¦
Besides making a lossā¦ I paid a way higher price: a hefty opportunity cost.
While Whatās Cooking fell, Lotus Bakeries kept rising.
Today, Lotus Bakeries is trading at a stock price of over ā¬10.000 (!).
My price money would have 4xāed if I bought the company.
Itās a valuable lesson: winners often keep winning.
Itās better to invest in champions than in so-called turnarounds.
Turnarounds seldom turn.
Just look at the numbers.
Compare Lotus with Whatās Cooking, based on the criteria we are looking for at Tiny Titans.
The difference couldnāt be larger.
Lotus checks almost every box. Whatās Cooking barely checks two.
Lotus Bakeries is an amazing success story.
If you invested $10.000 in the company in 2000, you would have over $2 million today.
You have a lot of examples like this:
š§ Applied Materials: +185,500% since 1986
š¬ Netflix: +73,300% since 2002
š¬ Danaher: +63,300% since 1986
š“ ResMed: +31,200% since 1995
š¢ Johnson Controls: +6,200% since 1986
At Tiny Titans, we look for these companies every single day.
$500.000 of real money is invested.
The goal? Grow this amount to $5 million.
To me, itās not the question if we will achieve.
The question is when we will achieve this (it might take a while).
Our Portfolio consists of wonderful companies that keep generating more shareholder value over time.
In the end, thatās the only thing that matters.
Donāt make the same mistake as me
The key thing I want you to takeaway from todayās article?
Donāt make the same mistake as the one I made.
Donāt comprise quality to invest in value traps.
We invest in Tiny (small quality) companies that have the potential to become Titans over time.
This can be very lucrative.
Why?
Warren Buffett agrees this is the best way to make amazing returns over time:
Just look at how these small quality stocks performed over the past 100 years:
I literally canāt wait to open the doors for Cohort 2 on the 9th of June.
Tiny Titans is not for everyone.
You need to apply to see whether there is a great fit.
You can do so here:
Hereās the question of the day:
A Partner of Tiny Titans recently said the following:
And hereās an email I received:
Talk to you next week!
Small Companies. High Quality. Big Potential.
Pieter
P.S. You need to apply for Tiny Titans. Not everyone is accepted. You can do so here.
P.P.S. Want a heads-up before the doors open? Drop your email and weāll ping you an hour before the 9th of June kickoff.