Performance of Top Glove since listing

Low Price in 2001: 0.27 (Price Range: 0.27 - 0.61)
Low Price in 2009: 3.58 (Price Range: 3.58 - 7.50)
Investing Period: 8 years

Over the course of 8 periods your investment grew from $0.27 to $3.58, its compound annual growth rate, or its overall return, is 38.14%.

Price increased 13.3 x, giving a gain of 1230%.

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High Price in 2001: 0.61 (Price Range: 0.27 - 0.61)
Low Price in 2009: 3.58 (Price Range: 3.58 - 7.50)
Investing Period: 8 years

Over the course of 8 periods your investment grew from $0.61 to $3.58, its compound annual growth rate, or its overall return, is 24.76%.

Price increased 5.8 x, giving a gain of 480%.

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High Price in 2001: 0.61 (Price Range: 0.27 - 0.61)
High Price in 2009: 7.50 (Price Range: 3.58 - 7.50)
Investing Period: 8 years

Over the course of 8 periods your investment grew from $0.61 to $7.50, its compound annual growth rate, or its overall return, is 36.84%.

Price increased 12.3 x, giving a gain of 1130%.

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Low Price in 2001: 0.27 (Price Range: 0.27 - 0.61)
High Price in 2009: 7.50 (Price Range: 3.58 - 7.50)
Investing Period: 8 years

Over the course of 8 periods your investment grew from $0.27 to $7.50, its compound annual growth rate, or its overall return, is 51.52%.

Price increased 27.8 x, giving a gain of 2680%.

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CAGR essentially smoothes out the progress of your investment over a period of time, providing a clearer picture of your annual return. However, although your investment started at $0.27 and ended with $3.58, its growth in any one year may have been quite a bit higher or even negative (if the investment ever lost money over that time). Consequently, the CAGR figure may give the impression that the investment has produced a stable return throughout its life, even if the investment was extremely volatile, fluctuating a great deal from year to year.


The above illustrates the importance of buying at a low price. Buying at a low price provides a margin of safety and magnifies the gains.

Challenges:

How can you spot a similar stock early in its business life?
Will you be able to put a large investment into such a stock?
Will you be able to stay the course without selling out, to capture all the gains from compounding at rates ranging from 24.76% to 51.52%?