Nvidia's $228 Billion Gain: A VC Approach to Investing
The Motley Fool's Chief Rule Breaker David Gardner made a series of stock recommendations in the second half of 2009. At first glance, some of those picks look unremarkable: Adobe (ADBE), Dassault Systèmes (DASTY), and Hasbro (HAS) all lagged behind the market. However, two other stocks - Interactive Brokers (IBKR) and Nvidia (NVDA) - vastly outperformed the S&P 500.
Interactive Brokers has beaten the market by over 2,300 percentage points, while Nvidia's stock price has skyrocketed from $0.38 to $228.87, a gain of more than 58,000 percentage points. When these two stocks are added to the mix with the underperforming trio, the average relative performance jumps to over 11,800%.
This approach is likened to venture capital investing, where firms know that most bets won't pay off but keep swinging for outsize winners. The goal is making sure that when you're right, you're right enormously.