An $800 investment in Amazon at IPO would now be worth over $1,000,000

Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.

Amazon is currently priced at $1,861.64 (AMZN), a 120,000% price increase since it’s IPO in 1997. Amazon’s come up is nothing short of remarkable, with the distribution giant reaching $1 Trillion in market cap. The common response to my last article regarding how investing $40k in Tesla would have made you a millionaire, was that $40k was a very unrealistic investment in a company that has come close to bankruptcy many times. Taking that into consideration, I have found a company that would have only required $800 initial investment to turnover millions. 

The brilliance of this is that Amazon’s initial IPO price was $18, meaning that $800 would have only bought you 44 shares initially. However, in the following year’s Amazon went under 3 splits- meaning they wanted to issue more shares and therefore would give holding investors more shares devaluing the share price. The 3 splits lead to a multiplier of 12, meaning after the splits you would know have 528 shares in Amazon. Now, in 2000 the value of your shares was worth around $40,000. Not bad right? At this point many people would have sold at least a portion of their shares as the share price was not likely to climb any higher. Here’s were it becomes a little unrealistic, as human’s we tend to act on emotion and therefore anyone that has made a cool 39k would tend to sell their shares – as we all know things come crashing down at some point.

If you held these shares through the troughs, even to the point where the stock staggered at $65 for many years,  you would now be holding over $1,000,000 in Amazon stock. Amazon in 1997, however was not the most favoured stock and it’s volume didn’t start ascending arguably till 2015 – almost 18 years later.

The moral of the story is that a calculated investment in a company with revolutionary ideas can pay off. Even an entry into Amazon before 2017 would have made you a very nice return. These companies are one offs – however revolutionary ideas should not go un noticed.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

If you enjoy our articles or are wanting to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support. 

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you. 

Written by Tyger Fitzpatrick, founder of YIG.

A hitchhiker’s guide to the stock market – by William Banham

For the most part, the stock market is seen to be a harsh mistress with an unforgiving track record. For someone who has never invested, or even looked at the market, establishing a basic understanding is so important, because most people are indirectly involved as it is. If you have ever held a job, your superannuation fund is more than likely to be involved whole or in part in equity-based investments, and for this reason alone, having a sound understanding is paramount.

You might have seen on the early morning news that the market has dropped so and so many points, or heard of the success story where someone turned $10,000 into $8,000,000 and retired at age 21.

Regardless of your stance, the market is a place where most of the youth in Australia tread very lightly. This report is the first of a series to help break down that barrier, which could down the track help you set yourself up financially for life.

The price of a stock is calculated purely based on supply and demand for a small percentage of a business, or ‘equity’ in that company. It is a price that is dictated by the number of buyers and sellers at any given price at a point in time. Shares, or equities, are bought and sold on the Australian Securities Exchange (ASX), which is a provider of price calculation and exchange open almost every weekday of the year between 10AM and 4PM. Essentially the ASX is a marketplace for investors to buy and sell tiny (or in some cases large) portions of companies, which are considered ‘public companies’, as they are listed party or in some cases entirely on the ASX for public purchase.

There are many factors in the modern market which affect share prices, and to better understand the nature of the market, looking at these simple terms will establish a starting point in your journey to becoming a seasoned investor.

Capital gain: is an increase in the price of a share over time. If the share goes down in price, that is called a capital loss.

Dividend: payment to shareholders by the company based on the value of the share. These payments are given at the discretion of the company, and generally are given twice a year, with ‘special dividends’ given in some circumstances.

Market Cap: Market capitalisation is a common way that businesses are valued. This is the current share price times the number of shares. In essence, Share Price x 100% of shares.

IPO: The Initial Product Offering, or IPO, is the first time that a company sells its shares to the public, to raise capital.

Blue Chip Stock: A Blue Chip stock is a general term referring to large companies that are financially established, and normally have a Market Cap in the multi-Billions. Most people agree that the ASX 50 (50 largest businesses on the ASX) are the ‘Blue Chip’ businesses, and they tend to be less effected by fluctuation and move with the market trend.

Penny Stock: ‘Penny Stocks’, also commonly referred to as a ‘speculative companies’ or ‘speccies’, are businesses that have a low share price, and thus a low market cap. These can be viewed as the opposite of bluechip stocks, which tend to generally fluctuate significantly and are seen as high-risk high return opportunities.

All Ords: The All Ordinaries or ‘All Ords’ is an index of the 500 largest businesses on the ASX in terms of Market Cap value. This index is seen as the barometer of the stock market, and is the oldest in Australia.

Bull and Bear Markets: The terms Bull and Bear markets are metaphors for the performance of the stock market at a point in time. A Bull is seen as an aggressive creature, which will rear its horns upwards to strike its opponent, which represents a market which is ‘running’ (increasing) positively. On the other hand, a Bear is a pessimistic creature, sceptical in nature and strikes in a downward direction with its claws: this implies a market which is pessimistic and downward trending.

These are some simple terms you have now learnt, which will set you up for future understanding which an investment strategy can be built from. Next week, it will get a bit more technical.

If you should have any questions, myself or any of the other associates would be happy to help.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

If you enjoy our articles or are wanting to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by associate William Banham