In the Fall of 2008, equity markets were falling apart. Well, the world did not end and 5 years later there are 98 stocks that gained more than 1000%.
Here are the top 10 performers of the past 5 years: biotech and old-media stocks have the most members in top 10. The former, because the market has not idea how to really price them. The latter, because in 2008, they were priced for bankruptcy and it did not happen.
$PCYC +8700%
$JAZZ +7450%
$KERX +6085%
$STRZA +5938%
$NXST +5116%
$RPTP +4864%
$GTN +4684%
$HGSH +4678%
$GENT +4570%
$ATSG +4431%
Study carefully the list of 98. You will notice that they did not become ten-baggers overnight. People like to say that past performance does not guarantee future returns. It is true. It does not guarantee them, but it could help you improve the odds of finding the next big winners. Look at $PCYC for example. It has more than doubled for 3 years in a row.
Here’s the thing about momentum. Stocks that outperformed in the past 3 to 18 months, tend to outperform in the next 3 to 18 months. Longer-term momentum (3-10 years) often leads to mean-reversion.
