Because of something that happened 20 years ago today.
On May 15, 1997, Amazon’s stock went public, at an initial price of $1.50 per share (adjusted for future stock splits).
IF (and I know that’s a big IF) I had used my extra earnings from teaching a couple of courses the previous summer and bought 6,000 shares on that first day, for a mere total of $9,000, and held on to the stock through this past weekend, and then sold the stock at today’s opening, I would be sitting on nearly $5.8 million.
That’s what a 38% annual return, over 20 years, does to your money.
They say a picture is worth a thousand words, so here you go:
But in this case, the picture doesn’t tell the full story. That initial investment of $9,000 would now be worth something like this:
I have no idea what I did with the extra money I earned from teaching that fateful summer from 20 years ago, but suffice it to say I didn’t buy stock in Amazon (or Apple, for that matter).
Being the eternal optimist, I thought there are other Amazons out there, just waiting for my investment. So last year I bought 100 shares of Twitter stock at about $25 per share, a price that was well below what it was selling for at the end of its first day of trading. I thought this might be the next Amazon, or Apple, or Google.
Well, based on today’s closing price for Twitter – $19.23 per share – it doesn’t look like I’ll be buying that beachfront any time soon. And if the trend continues, I’m not even sure I’ll be able to afford beach tags in Ocean City, NJ this summer.