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I Turned $3,000 into $210,000

This article sports quite the headline, doesn't it? It might smack of exaggeration. But believe it or not, it's true. Come with me now, on a journey into the past.

How it happened
Picture it: New Jersey, 1995. I was not yet a Fool employee. Perhaps like you, I was an avid reader of the online site. The Fool-founding brothers, David and Tom Gardner, were occasionally recommending stocks, and one of their recommendations was an online service provider called America Online (AOL).

I was still quite new to investing and didn't know enough to do much of my own research. But at least I had one thing going for me: I was an AOL customer. I used the service every day and liked what I saw of its user-friendliness, usefulness, and potential. So I bought. I snapped up $3,000 worth of shares and hung on.

Over the following years, the stock would go up and down, sometimes significantly, but I kept holding on. And overall, it mainly went up, and it split and split. I remember checking my portfolio very regularly -- several times a day! -- to see how rich I was becoming. I think that near the stock's peak, I was in possession of a 70-bagger! My $3,000 investment had become worth $210,000. If it doubled in value only two more times, I'd be (almost) a millionaire! All from a measly $3,000 investment.

Did I sell shares along the ride up? No. Did I sell at least some near the top, when my mom told me to? Nope. (That strange thudding sound you hear is me kicking myself.) I kept holding on. AOL merged with Time Warner in 2001, and ever since then, the stock has struggled. I remember when the shares were priced in the $70s, but it's a fuzzy memory. They've been below $20 for almost four years now. I did sell a big chunk of my shares -- in the teens -- when I needed money for a down payment on my house. And I finally got smart and sold some shares to diversify into some other stocks instead of holding such a big chunk of my net worth in a company in which I no longer had the most faith.

I still hold some shares, though, and despite my inclination to curse my stupidity at not selling earlier, I'm still sitting on a handsome profit, even at current levels. My cost basis is ridiculously low, and this has still been one of my best investments, ever. I really shouldn't complain.

How you can do it
If any of this story appeals to you, know that you have a chance to make it yours -- perhaps with an even happier ending -- if you make a few decisions differently:

  • First, pay attention to products and services you know, use, and love -- especially if you see more and more people using them. There may a great stock behind them, no matter whether they're big or small companies. There are some wealthy people out there who years ago noticed that a coffee vendor named Starbucks was starting to spread out. There are plenty of well-known companies that have done phenomenally well over the past decade or two. Are you a happy iPod owner, a digital camera user, or a frequent searcher on Google (Nasdaq: GOOG  ) ? Apple (Nasdaq: AAPL  ) , buoyed by the incredible success of its iPod, has roughly quintupled in value in the past five years, and is more than an eight-bagger over the past 12 years. Flash memory card maker SanDisk (Nasdaq: SNDK  ) has been a 15-bagger over the past decade, powered by the growing popularity of digital cameras. Google's shares, just out of the gate less than two years ago, have already just about quadrupled.
  • Along those same lines, be wary of what you don't understand.
  • If you buy in to a company hoping that it will be a multibagger for you, buy to hold. As long as you have faith in the company's future, it's often best to just hang on, despite inevitable hiccups. Don't let some naysayers in the media get you out of a stock because of short-term concerns when you still have long-term confidence. Consider Wal-Mart (NYSE: WMT  ) . For its earliest investors, it's been more than a 900-bagger over roughly 30 years. For those who've hung on for just the past decade, during much of which the stock has been stalled, it's quadrupled their money -- still not bad, eh?
  • Do consider selling at least some of your shares if they rise to levels you can't justify. That was my main mistake -- irrationally and greedily hoping to get even richer. If a stock is trading for more than you know in your heart that it's worth and you still hang on, you're no longer investing -- you're speculating, at great risk.
  • Finally, consider checking out the stocks that David and Tom Gardner are recommending now. Their Motley Fool Stock Advisor newsletter service, launched in April 2002, offers two picks (and two investing styles) each month. On average, their recommendations are up 67%, versus 22% for like amounts invested in the S&P 500. Those gains are in part made up of Marvel Entertainment (NYSE: MVL  ) , which has more than quintupled since the first of several times that David recommended it, and Tom's pick Silicon Labs (Nasdaq: SLAB  ) , which has more than doubled in a little over a year. They have a few losers, of course, but these two picks show just how fast money can grow. You can try Stock Advisorfree for 30 days -- and you'll have full access to past recommendations.

Here's to big profits in your future!

(Consider forwarding this article to anyone you care about. Just click on the "Email this page" link near the bottom of the page.)

This article was originally published on Feb. 2, 2006. It has been updated.

SelenaMaranjian'sfavorite discussion boards include Book Club, Eclectic Library, Television Banter, and Card & Board Games. Sheowns shares of Time Warner and Wal-Mart.Time Warner, Silicon Labs, Marvel Entertainment, and Starbucks are Stock Advisor recommendations. For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.

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Selena Maranjian

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

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