The Ecstasy and the Agony of Single Investments

Ben Carlson discusses the highs and lows of PayPal, whose gains of over 700% from 2015 to 2021 have now all but evaporated:

As Carlson notes, PayPal’s long-term performance hasn’t just severely lagged that of the S&P 500—it also has had less than half the annualized returns of T-Bills.

Carlson also remarks that the wild gyrations of PayPal are a phenomenon that is not uncommon for individual stocks, such as Oracle or Nike: 

Massive movements are not limited to individual stocks. As Carlson observes in another article, silver has fluctuated wildly this year:

Silver fell over 25% on the last trading day of January, but still finished the month up over 10%. As Carlson notes, supply chain reasons and AI’s demand for physical inputs has probably helped spur silver’s climb. But he also argues that technology’s rapid dissemination of information have enabled markets to move faster and faster, so that hot stocks can become even hotter. If you’re on the right side of an individual stock, the gains can be enormous. But if you’re taking that risk, you’re also exposed to a potentially massive downturn.

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.