My first two bagger

My first two bagger

I was just perusing over my portfolio this weekend and realized that I have my first two “bagger”. In investing the term “bagger” was coined by Peter Lynch, which refers to an investment that has multiplied in value. He actually often used terms like 6 or 10 bagger, which he grabbed from the game of baseball where “bags” or “bases” that a runner reaches are the measure of the success of a play.

Regardless I have my first investment that has doubled in value. On Oct 21, 2005 I bought 22 shares of PCAR @ 42.49 per share. Today the price sits at roughly $86 per share netting me a 100+% return on my money on paper. It actually happened a while ago, but I just realized it now. PCAR also has a 1.2% dividend yield which I haven’t been counting into my returns so overall it has been a pretty good investment for me.

So what does this mean?
Nothing really, other than I got lucky and picked an investment that has done well the last year and a half. It has nothing to say about my stock picking skills or the quality of investment that PCAR will be for me in the long-run. It’s just an oddball statistic that is pretty cool to point out. Sort of like a hole-in-one, it really requires no skill and can happen to anyone and doesn’t mean you aren’t going to still shoot 100+ for the round. Only time will tell.

Sources: Wikipedia

  • NCN

    Good for you! Most of my individual stock purchases have been more like weak ground outs to short. 🙂 Keep it up,
    NCN
    BTW.. What percentage of your portfolio is allocated to individual stocks?

  • MFJ

    NCN – Not real scientific, but for the most part mine and my wife’s IRAs the last two years are invested mainly in individual stocks. My 401k and previous IRA contributions are in mutual funds. So maybe a third?

    To be honest individual stocks have treated me very well, but the market has been very favorable the last couple years. Basically my fly by the seat of the pants gameplan is – 401k and initial mutual funds will be the core of my retirement portfolio. So if I completely strike out with my stocks or get sub-par results I will still have a comfortable retirement. If however my individual stocks hit a lot of homeruns for me retirement might be earlier or more exciting, so basically they are a somewhat educated risk I’ve decided to take on.

    All this being said I sort of rely on a newsletter for my individual stock picks as to be honest I don’t think I could learn enough on my own in the next 30 years to pick stocks that might have a chance at beating the market. Now blindly following someone else’s advice has it’s own problems, but the newsletter I subscribe to I think really fits my style and very much agree with the rational on the stock purchases (gulp…gulp..mmm…good kool-aid) 🙂

    Short of it is I’m taking a risk by investing in individual stocks and while I can afford to strike out – I’d pretty much just recommend that anyone else just stick with low-fee index funds as the odds are greatly against any other method beating their returns.

  • j2r

    Following your steps, I signed up for one of the newsletters on Fool.com. Hope to have a few baggers of my own eventually 🙂

    They are actually really good, specially the discussion boards.

  • MFJ

    j2r – Interesting. I’m currently a subscriber of the Stock Advisor newsletter and yes the boards are a great bonus – lots of smart people in there.

  • j2r

    That’s exactly the newsletter I subscribe to.
    I seem to like Tom’s picks rather than David’s.

    I have a similar approach to you. I keep only mutual funds on my 401k and IRA. On my investment accounts, they’re kinda 50/50 (mutual funds vs stocks)

    I’ve been trying to force myself lately to put more in Fixed Income – CDs/Money Market (at least 10%, but it’s hard given the great bull market recently)

  • MFJ

    Very interesting…I too like Tom’s methodology much more than David’s and for the most part only purchase Tom picks.

    I too have been looking at looking at a more at income investments to bolster my portfolio in a downturn, although I’ve been thinking more high yield stocks or starting some DRIPs versus CDs/Money Market as I’d find it hard to give up that much return on my investments.

    Anyway best of luck to you and maybe I’ll see you on the SA boards

    MFJ
    Who would give you his fool screen name, but might give away his top secret identity if he did 🙂

  • Congrats on your first two-bagger. I just got my first two-bagger yesterday. I purchased CHN for $28.56/share about a year-and-a-half ago. I sold half of my shares yesterday for $52.85/share.

    I have enjoyed reading your blog and am now a subscriber. Keep up the good work!

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