In 1939, the late Sir John Templeton took $10,000 and invested it equally among 104 stocks trading for $1 or less. Templeton was betting that the market’s tiniest innovators wouldn’t just survive the Depression, but that they’d lead the way out.
Although 34 of the companies went bankrupt, Templeton’s investment grew from $10,000 to $40,000 over the next four years.
Templeton harnessed the power of tiny innovators. He understood that the financial upside of genuinely innovative companies would far transcend the negative impact of the duds.
So if you’re avoiding the market’s tiniest innovators, well… you’re costing yourself thousands. Perhaps even tens of thousands.
As market history proves, innovation is always rewarded with higher share prices. In fact, you’ll be hard pressed to find a single company over the last 200 years whose earnings expanded, yet its share price didn’t follow suit.
Microsoft. Apple. Cisco. All once tiny innovators, they now add hundreds of billions of dollars to global GDP, and provide jobs to over a million people.
More recent examples of innovators that not long ago traded for less than $1/share include…
- True Religion (TRLG) is an innovator of designer jeans worn by Megan Fox and Angelina Jolie. The company was recently acquired by TowerBrook for $835 million. The stock once traded for a single penny ($0.01) before blasting to over $32/share. Talk about breathing life into your retirement? Imagine earning 319,000%.
- Monster Beverages (MNST) sold more than $2 billion worth of energy drinks last year and employs over 1,200 employees. The stock once traded for pennies before going vertical to over $138/share.
- Medifast, Inc. (MED), an innovator of weight-loss solutions, is endorsed by a network of over 20,000 doctors. The stock once traded for $0.14. Shares recently hit $33.
What do all of these innovators have in common? They’re classic first-movers, which means they’ve gained dominant positions within untapped, billion-dollar markets.
Innovation never disappoints.