Here's How You Turn $450 Into $1 Million

For those of you keeping track at home, turning $450 into $1 million would require a lifetime return of 222,222%.

Preposterous. Impossible. Flat-out stupid.

These are the types of comments you should expect to hear by shooting for such results.

Make no mistake, this kind of success isn't easy to come by -- but it's also not impossible.

To create returns like this, you need to know where to look. Today, I'm going to share with you one secret that can supercharge your portfolio: Invest in companies that are truth-killers. These organizations slaughter the so-called "truths" in our society, exposing them for the myths they are.

A short history of truth-killers
We've all heard the story of Christopher Columbus. According to legend, he revealed that a huge "truth" -- that the world is flat -- was actually a myth. If we go back further, we see that before Copernicus, it was accepted as truth that the earth was the center of the universe.

Killing these truths and exposing them as myths used to be a difficult process. But these days, it seems to happen on a regular basis. My grandma once believed that she'd never see me again once I moved to Costa Rica, but through the power of Skype, we were talking face-to-face one week later.

In the investing world, spotting companies that are killing widely accepted truths is the key to market-clobbering returns.

Take a look at the chart below, which highlights a few recent truth-killers, and reveals the returns they've provided to investors (assuming all dividends we reinvested).

Company

The myth exposed

$450 at IPO is now worth

CAGR

Netflix (Nasdaq: NFLX  ) Movies must be rented at a store. $15,400 48%
FedEx (NYSE: FDX  ) Domestic packages can only be delivered by ground transportation $43,700 14.8%
Amazon (Nasdaq: AMZN  ) You purchase books at a bookstore. $50,700 40.1%
Wal-Mart (NYSE: WMT  ) Only big cities can fulfill all your shopping needs. $1,008,600 21.4%

*Sources: Yahoo! Finance, FedEx and Wal-Mart investor relations. Returns based on closing price on first day of trading.

All four of these companies turned conventional wisdom on its head. If you were prescient enough to get in on the ground level and patient enough to hold throughout the years, you'd be sitting on a huge pile of cash right now.

What's the next truth on the chopping block?
There are lots of ideas floating around about what the next big thing will be. Many companies will come up short, but a precious few will succeed. If you invest in just one truth-killing company in your entire life, that alone can lead to untold riches.

Below, I've singled out three companies that I believe have the potential to produce such results.

Company The truth being killed
K12 (NYSE: LRN  ) Children must be formally educated in schools.
Tesla Motors (Nasdaq: TSLA  ) You need gasoline to drive a car.
Zipcar (Nasdaq: ZIP  ) You need a car in the first place.

K12 is an online educator that provides all the schooling a student needs, from kindergarten all the way through high school. The free, publicly accredited school caters to both struggling and advanced learners, students who are mobile either by chance (e.g. parents in the military) or by choice (e.g.. an elite athlete), and homeschoolers. Last year, K12 was responsible for educating about 70,000 full-time students nationwide.

Tesla Motors, the Silicon Valley-based brainchild of PayPal co-founder Elon Musk, aims to provide a stylish car that can run on electricity alone. The company needs to make strides before it can become a serious threat. Its Tesla Roadster clocks in with a price tag of more than $100,000, and the company has yet to turn a profit.

And though Zipcar may not ring a bell with rural folk, ask any city slicker about the company and you're sure to get rave reviews. The company owns a fleet of cars covering 14 major cities and 230 college campuses across the United States. For a yearly fee of $50 -- and much smaller per-hour rates -- Zipsters (as they call themselves) can trek around downtown all they want, gas and insurance included, without the hassle of owning a car.

A Foolish takeaway
In the investing world, there are no guarantees. These three companies could all be wildly successful ... or flop. Most likely, they'll land somewhere in between. Just remember -- all you need is one truth-killing stock in your portfolio to make a fortune.

If you're interested in further ideas, I'll provide you with access to a free report: The Motley Fool's Top Stock for 2011. In it, our senior stock analyst reveals why "this stock is cheap relative to its potential, but won't be for long." Click here, and the report is yours for free.  

The Motley Fool owns shares of Wal-Mart and FedEx. Motley Fool newsletter services have recommended buying shares of Amazon.com, K12, Netflix, Wal-Mart, and FedEx, buying puts on Netflix, and creating a diagonal call position on Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Brian Stoffel believes in the power of truth-killers. He owns shares of Amazon and Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (42) | Recommend This Article (131)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 27, 2011, at 4:24 PM, catoismymotor wrote:

    You had me at 222,222%.

  • Report this Comment On May 27, 2011, at 9:25 PM, fennecfoxen wrote:

    ZipCar's cool, don't get me wrong - but don't underestimate the competition from the likes of companies like Hertz, who already have lots of cars and lots of locations and can copy their business model.

    Tesla and all-electric cars are probably overrated. I look for success with plug-in hybrid models (gasoline fuel or otherwise) coming from more traditional manufacturers because the flexibility the engine buys you is really pretty awesome.

    No opinion on K12. Do the teachers' unions know about it? :P

  • Report this Comment On May 27, 2011, at 11:11 PM, HectorLemans wrote:

    Articles on stock investing that tell you which of the tens-of-thousands of potential past investments did the best and then tell you to try and find those same type of investments for the future are so helpful!!!!!

    /sarcasm

    //Why don't I just try and figure out which lottery numbers will be the next winner?

  • Report this Comment On May 28, 2011, at 10:22 AM, ex2c wrote:

    Myth exposed: It was not Columbus who did it... it was Magellan. Remember that Columbus was the one who thought the America today was actually India and did not sail further.

  • Report this Comment On May 28, 2011, at 10:36 AM, mcash454 wrote:

    ....and Magellan died along the way. In any event I don't think 16th century explorer facts are really at the crux of this piece.

    I'm intrigued by the LRN business model, even though it makes me feel old and crotchety because deep down I think that's a horrible education plan (not claiming our current system is great either).

  • Report this Comment On May 28, 2011, at 12:20 PM, David369 wrote:

    Yeah, it is sort of like the lottery but at least you can filter out the same old type companies and then choose from the new idea/process/service companies. I doubt that would be very many IPOs per year. Makes the odds very much better than the lottery. Of course, the investment would be much more than the dollar lottery ticket also but most of the investments would probably be around for a few years even if they never really do well. MF will probably start a new newsletter. Maybe called "Future Bets".

  • Report this Comment On May 29, 2011, at 6:37 PM, TMFDiogenes wrote:

    Whoever is debating Columbus vs. Magellan -- you Fools rock!

  • Report this Comment On May 29, 2011, at 8:14 PM, TimothyVR wrote:

    Tesla and Zipcar are one star stocks according to the Fool community.

    I'm confused......

  • Report this Comment On May 30, 2011, at 11:34 AM, ryanalexanderson wrote:

    Also, regarding Columbus and Magellan - Eratosthenes actually calculated the circumference of the Earth 1500 years before Columbus. And his value, far from infinity, was pretty close to nailing the right number.

    Not sure if there's an investment analogy to this particular factoid, though. Perhaps that good ideas are formed in the past, then forgotten. Then someone with the right financial backing comes along, sexes up the forgotten idea, and grabs all the credit and money.

  • Report this Comment On May 30, 2011, at 5:30 PM, Gailen wrote:

    This is no ridiculous. Now you tell me i should have during roulette bet on 0 the last time it won 5 times in a row. Foolish me for not being there and doing that. And foolish you for wasting a fool's time.

  • Report this Comment On May 30, 2011, at 5:32 PM, PeakOilBill wrote:

    If I had to guess at the next mega return stock, I would say it will be a company that develops a program that can do research, so that you won't have to search various web sites and try to find relationships yourself. Just think if you could ask a program something like, "Which pipeline master limited partnership will be least impacted by rising interest rates?" A company that could give an answer, or ask you for more information relevant to your question, could make you VERY rich. IBM is working on it , but may not get it done for a long time. I doubt if anyone can say if it will take 10 years, or 100.

  • Report this Comment On May 30, 2011, at 5:46 PM, TMFCheesehead wrote:

    @David369-

    You got to the heart of the argument well. Of course, looking back won't give us any returns right off the bat. But the fact of the matter is, by looking for characteristics that some market-thumpers share, you can significantly improve your chances. And unlike the lottery, "losing" doesn't mean losing your money, it just means it doesn't go up 222,222%...not a bad deal if you ask me.

    @TimothyVR-

    Not sure how familiar you are with CAPS, but the star-based ratings are the result of whole-community sentiment (as opposed to simply being determined by TMF staff). Sometimes, the whole-community can be wrong...just look at LULU or CRM

    @the history buffs-

    I'll conduct my anecdotal research more thoroughly next time!

    Brian Stoffel

  • Report this Comment On May 30, 2011, at 6:25 PM, extremist wrote:

    ALL successful companies are "truth-killers." Without some measure of deception and dishonesty, it's impossible to make it in today's world, and anyone who disagrees is either naive or himself engaged in deception. In addition, note that just like in a lottery, only a lucky select few can reap the rewards of a preposterous return like 222,222%. Despite the US government's best efforts to prove otherwise, there can only be a limited amount of money around at one time, at least if the money is to be worth anything at all.

  • Report this Comment On May 30, 2011, at 6:26 PM, GtownRJ wrote:

    The argument in Columbus's time was not that the earth was flat, but how big it was, most (educated) believed that Eratosthenes had the right number, but Chris believed the later calculations of Posidonius which were smaller (25K to 18K miles), which was why he thought he was in India. Another interesting thing is that Eratosthenes made mistakes but still got the answer right, so if just one of those stocks take off and the other two don't you could still be right, but how one of them could be Tesla making $200,000 cars they sell for $100,000 is a bit hard to fathom for me.

  • Report this Comment On May 30, 2011, at 7:35 PM, dividend123 wrote:

    I think these are wild exaggerations.However, I nearly hit a home run with netflix but when in went to $99 I thought that was it and sold. That was January 2010. I have been waiting for it to drop back to $70-$80 and each time it climb I said It would'nt go higher but it did

  • Report this Comment On May 30, 2011, at 9:06 PM, nwjh wrote:

    The 222,222% is the total return. About 22% p.a. for 40 years will produce that, which is the Walmart figure. Reinvestment of dividends can lift the stock price return by several percentage points to help achieve this overall return. Netflix and Amazon could achieve this if they can maintain something like 40% return for 23 years. Some stocks, like BHP, have managed 20%+ p.a. over the last 4 years (not including dividends), but over longer periods are not necessarily growing at that rate.

    Note that for the last 40 years, the cost of living (as per the CPI) has grown by about 548%, i.e., a dollar today is worth about 18.3c in 1971. So you need significant growth to keep the same amount of purchasing power. So that $ 1 million today is really about $ 182,500 in 1971 dollars. 16.5% p.a. over 40 years would achieve that if inflation were zero, but 4.5 percentage points are for inflation.

    Among the educated, there has been little doubt about the Earth being approximately spherical for about 2,500 years. Size was the issue for Columbus, and had the Americas not been there to stop him, he would have perished in the vastness of the Pacific. He and Spain were lucky and managed a good ROI. But only the truly ignorant of the time believed the Earth was flat.

  • Report this Comment On May 30, 2011, at 10:45 PM, mdamico2011 wrote:

    One stock that I believe is going to be a "Truth Killer" is SiriusXM. The myth that's going to get killed is: "Sirius subscribers will quit using SiriusXM when they realize they can get their entertainment for less, or even free with an application on their cell phone." The fact is that Sirius subscribers are Serious about their Sirius radio. You must be a Sirius subscriber to know what I'm taking about. An application on a cell phone is not equivalent to a dedicated Sirius radio on your dash board, which only has one design purpose: to give their subscribers the largest variety of audio entertainment with the least amount of hassle. Also amazing, is if you take a look at the performance of this stock, from say, a year ago, it's given its investors the best of both worlds: You won BIG time if you sold sort and repurchased when the price went down, and you're doing darn good if you just left your money in (like I did). The way this stock has been going two steps forward and then one step back, it seems like it's a perfect opportunity to make money on every cycle. I personally think this stock's performance is going to go down in history as a money maker for anyone who jumps in on the "Band Wagon"!

  • Report this Comment On May 30, 2011, at 11:11 PM, OldJock wrote:

    Dear All,

    Are there any fools who can tell me how much one ASX:BHP share was worth in 1955?

    Is it then posible to work out the total percentage return to date?

    and with dividends reinvested?

    Yours,

    Old Jock

  • Report this Comment On May 31, 2011, at 3:00 AM, stockcardriver wrote:

    Ok,since this is my first post I'll keep it simple.Electric cars are all the rage with the green people," Right"?.Well I hate to burst anyones bubble but in all the excitement has anyone bothered to ask, " WHAT HAPPENS TO THE OLD BATTERIES"?. Yeah that's right the hazardous material filled batteries that don't last forever," HELLO ". Don't get me wrong but the manufacturers of all the electric this and that (green) so called environment friendly vehicles are " NOT"!! For once I would love to hear the whole truth told to the public,but since they won't I will. I could go on but I said "Simple",so just think for a moment start to finish,the making of,distributing of and use of electricity,then the disposal of the after math.Now,.......still see the same color? Thanks,for at least thinking about it.

  • Report this Comment On May 31, 2011, at 7:53 AM, Sunny7039 wrote:

    Does everyone have equal access to IPOs?

    Note: a rhetorical question

  • Report this Comment On May 31, 2011, at 11:34 AM, brewersfan81 wrote:

    @Sunny7039-

    Great point. I actually used the price at closing on the date of the IPO

    Brian Stoffel

  • Report this Comment On May 31, 2011, at 11:36 AM, TMFCheesehead wrote:

    Sorry, should've used my TMF name for that comment

    Brian Stoffel

  • Report this Comment On May 31, 2011, at 12:06 PM, FleaBagger wrote:

    In Columbus' day, everyone who had an opinion on the shape of the world knew (or was fairly confident) that it was round. They did not tell Columbus he would sail off the edge of a flat earth (except in popular myth), but rather that he would die in a vast, landless ocean. They were correct about the size of the world and he was acting on correctable ignorance and misconception. Of course, he won anyway, because there was another continent in the middle of that vast ocean they knew lay between Europe and East Asia.

  • Report this Comment On May 31, 2011, at 12:09 PM, FleaBagger wrote:

    I just read all the comments and see nwjh said the same thing. Sorry!

  • Report this Comment On May 31, 2011, at 12:27 PM, mikecart1 wrote:

    One of the worst articles in Motley Fool History. If Hitler was aborted millions of people wouldn't have died. These 'time-machine' inspirational articles do no good for anyone. You only create more people swinging for grand slams and less people trying to make contact with the ball. You will wind up with a market full of broke investors when their dreams are shattered when we still put kids in real schools, we find one of the major car companies today beating out Tesla in their own game, and people not willing to pay a premium to NOT own a car.

    Terrible article is Turrible - Charles Barkley

  • Report this Comment On May 31, 2011, at 12:44 PM, ElonFan wrote:

    I think Tesla and and the success of their cars are dependent on bringing down the cost. However, I think there's alot to be said for the company and patented and exportable technology they utilize in the cars, which allow them to go farther down road between charges. That I believe, may eventually prove to be a more valuable asset to the company than their cars. It's my understanding that there are some big market players interested in tapping into that.

  • Report this Comment On May 31, 2011, at 12:47 PM, ElonFan wrote:

    I can't wait for SpaceX to go public and lead the way, twice as fast and thrice in price in commecial space flight.

  • Report this Comment On May 31, 2011, at 1:01 PM, Turfscape wrote:

    stockcardriver wrote: "Well I hate to burst anyones bubble but in all the excitement has anyone bothered to ask, " WHAT HAPPENS TO THE OLD BATTERIES"?."

    Yes. Many, many people have asked that question. That's why they have instituted extensive recycling operations to deal with expired batteries.

    And, don't worry...I'm fairly certain you haven't burst anyone's bubble.

  • Report this Comment On May 31, 2011, at 2:04 PM, TMFTomGardner wrote:

    Hey Mike, you might want to take a free trial to our Rule Breakers service. You can cancel without paying a dime. You'll have a month free. But just take a few hours and look at the scorecard carefully. Our Rule Breakers investment approach has simply crushed the market.

    There is no reason to shudder in fear when looking to the future. There are major trends to track. And everything out there is a game of probabilities. If you manage your portfolio well, then intelligent growth investing can beat the market, at low cost, with deferred taxes, and massive multi-decade gains.

    I recommend you read about the life and work of Thomas Rowe Price, the founder of T. Rowe Price, for a shining example.

  • Report this Comment On May 31, 2011, at 6:41 PM, blacktreechaser wrote:

    Let's see....if I invested $45,000 in 100 different companies....and 99 of them went belly-up....and the other had returns like walmart....I think I'd be a happy camper.

  • Report this Comment On May 31, 2011, at 11:01 PM, BAD68CHEVY wrote:

    Stoickcardriver: Lithium Ion batteries can be recycled. By the way, the new Nissan leaf is 99 percent recyclable when its life is up. And if a cell goes bad in the battery, that one cell can be replaced (there are 48 individual cells in the battery) instead of replacing the whole battery.

  • Report this Comment On June 01, 2011, at 3:12 AM, Sunny7039 wrote:

    I have an idea. Just tell us how to turn $450 into $45,000, for starters. You know, as a warm up. Be sure to give a time frame as well . . . one that is not too close to the average MF reader's remaining life expectancy.

  • Report this Comment On June 01, 2011, at 2:11 PM, GettingtobeaGuru wrote:

    @sunny7039

    I totally agree. I can do without the window dressing, just give me the "magic bullet" you've discovered and let me figure out if it works or not, but since I see immortality at least being discovered within my life time that time frame things isn't to problematic.

  • Report this Comment On June 01, 2011, at 2:17 PM, GettingtobeaGuru wrote:

    Actually there you go, I just gave you a "magic bullet" in 4 lines of text. Invest in the company that discovers the secret to immortality. Profit.

  • Report this Comment On June 03, 2011, at 1:53 PM, newbie420 wrote:

    would anyone here take a chance on Isreali oil (ZN) i bet it would be cheaper than arab

  • Report this Comment On June 03, 2011, at 2:32 PM, MTHDCL wrote:

    @sunny 7039..

    YOUR comment is itself priceless...

    As a matter of fact I'd settle for 4500.00 right now!!

    ..It's Friday and I could use some weekend (drinking ) money..to mull over how to best plan for the 450k move

    :O)

  • Report this Comment On June 03, 2011, at 2:55 PM, mtf00l wrote:

    MTHDCL,

    Ditto =D

  • Report this Comment On June 03, 2011, at 5:06 PM, MW7 wrote:

    The beauty of the stock market is that you can "work" it. Why all the whining about not getting a push button solution? I'm saying God is in the details and patience has a reward, not to mention diligence. I enjoyed the idea.

  • Report this Comment On June 03, 2011, at 5:20 PM, pacella wrote:

    stockcar driver, The material used in batteries is material that is found in nature, returning it to nature should not be a problem. Even in the case of new compounds being made, they can be chemically broken down to make then less dangerous. Everything can be recycled, it's just a question of cost.

  • Report this Comment On June 03, 2011, at 8:39 PM, noflu wrote:

    Why you going to Costa Rica, America not good enough for you?

    U.S. stock market is, I'll bet.

  • Report this Comment On June 03, 2011, at 11:23 PM, skaura wrote:

    Can anyone explain how to purchase shares at the IPO price please...thanks.

  • Report this Comment On June 04, 2011, at 12:35 PM, Smiffys wrote:

    @nwjh

    Hi Bill, as you went to an Australian university, I assume you picked BHP had plenty of potential while you were here.

    BHP is a great stock, but their increase in value to US investors has a lot to do with the increase of the AU dollar vs US dollar rather than an increase in BHP's stock increase.

    Here in Australia, BHP were AUD28.85 5 years ago and they are now AUD44.25. This represents maybe a 10% increase per year. However, if you look at the the AUD vs USD exchange rate chart you'll see that the AUD has doubled it's value against the USD over a similar period, hence your 20% return per annum is correct, but US investors would have made 10% per annum against any Australian stock that didn't improve at all over the last 5 years.

    The lesson learnt here is you should diversify not only in US stocks but in global stocks too. However, being Australian, my investments have all been in Australian stock. About 15 years ago I requested my fund manager to diversify 25% of my investments into US and Europe funds, this decision hasn't worked for me because the Au dollar appreciating has cancelled out all the increase of value from the US & Eur. Most years I've made a loss or minimal return from that investment. US & Eur investors that have invested in Australian stocks would, I assume, be very happy!

    @oldjock

    I can't find the value of BHP in 1955, but I found they we're a low of AUD 0.52, hi AUD 0.58c close AUD 0.56 in December 1982. And they paid an incredible 0.20c dividend for 81/82 and 82/83, in 83/84 they increased their dividend to 21.5c, they kept increasing their dividend until around 2000.

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