Why You Should Aim for Big Returns

Danial Jiwani is the author of Take Stock In This, which has been called “The Next Intelligent Investor” by readers. With the author’s books being read by Howard Marks and Bill Ackman, Jiwani is one of the leading thought leaders in the investment industry.

He opens the book with a story of how one retali investor–Mr. Garrett–became a millionaire by leveraging The Take Stock In This strategy.

One of the elements of the Take Stock In This strategy is to aim for big returns. Don’t aim to outperform the market by 1-2%. Rather, aim to pick 10-baggers that crush the market by hundreds of percent.

That’s exactly what Mr. Garrett did.

Rather than screening for stock that he believed would outperform the market by 1-2%, he only screened for stocks that he believed would become 10-baggers. 

That led him to two stocks: Haloid and Telepromopter. He bought 133,000 shares of Haloid at $1 per share and 50,800 shares of Teleprompter at $0.75 per share. Both investments turned out very well. Teleprompter went on to grow over 30 times, and Haloid eventually became a company called Xerox. 

The success of both investments (and few others as well) pushed his net worth to just over $63 million in today’s money. 

The lesson?

If you want to get wealthy in the stock market, learn to pick 10-baggers like Mr. Garrett. 

My Secret To Become a Millionaire in the Stock Market

You might be thinking, “picking 10-baggers must be hard. There is no way I can figure out which stocks will grow 10x times in value.”

But that’s where you are wrong.

The reality is that it isn’t difficult to pick 10-baggers. 

All you have to do is invest in quality companies with a long runway to grow sales.

At least, that’s what Mr. Garrett did. As one observer said, “[he looked for companies that] have a unique product that would do an essential job better, cheaper, and / or faster than before . . . with prospects of great and longcontinued sales increases.

It’s also what other successful investors do. The reason Nick Sleep invested in Amazon during the early 2000s is because it was a quality company with lots of room to grow sales, and that investment turned into a 10-bagger. Similarly, Peter Lynch invested in Toys R Us (a 10-bagger for his portfolio) because it was a quality company that had lots of room to grow sales. As he said, “We look for companies that have something unique. An example would be Toys R Us when I first found that. [At the time], they only had seven or eight stores. You would have said to yourself, “this concept could have two- or three-hundred stores.”

Does Investing in 10-baggers involve lots of risk?

Many people think that picking multi-baggers involves making super speculative bets. People think that you have to somehow pick which penny stock will become the next Amazon.

But that isn’t really the case.

Nearly every single successful investor in multi-baggers make their money in large blue chip companies.

When Peter Lynch invested in Dunkin Donuts, it was one of the most popular donut franchises in the world at the time. There was nothing remotely close to being speculative about the company. Yet, he still earned over 1,000% returns in the stock. 

When John Neff invested in Ford Motor Company, it was one of the Big 3 automotive manufacturers in the country. It doesn’t get much more established and less speculative than that. Yet, he still earned over 500% returns in the stock. 

When Bill Ackman invested in Chipotle, it was one of the most popular fast casual restaurants. Again, there was no gambling on penny stocks involved. Yet, he still earned over 600% returns in the stock.

Next time someone tells you that investing in mulit-baggers is risky, think again. 5-baggers and 10-baggers  can be found in some of the safest companies in the entire stock market!