This article's salacious headline might smack of exaggeration -- but believe it or not, it's true.

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

I was still quite new to investing, and I 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 I 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. Overall, it mainly went up, and it split and split. I remember checking my portfolio regularly -- several times a day! -- to see how rich I was becoming. Near the stock's peak, I was in possession of a 70-bagger! My $3,000 investment had turned into $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. The silence is my mom, biting her tongue.) I kept holding on. AOL merged with Time Warner in 2001, and for years after that, the stock struggled. I remember when the shares were priced in the $70s, but it's a fuzzy memory. They spent years below $20, until very recently. 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 even more 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 hold some shares, though, and despite my inclination to curse my stupidity for 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 part 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 be a great stock behind them. Plenty of well-known companies have done phenomenally well over the past decade or two. Do you have some SanDisk (NASDAQ:SNDK) memory cards in your digital camera? Do you use Yahoo! (NASDAQ:YHOO) for email and shopping? Do you fill your car up at your local ExxonMobil (NYSE:XOM)? SanDisk stock has been volatile over the past decade, but those who've hung on have enjoyed a compound annual growth rate of 33%, and a total gain of roughly 1,700%. Yahoo! shares have increased in value nearly 20-fold in the same decade, despite that big stock market hiccup a few years ago. Over the past 20 years, ExxonMobil stock has gained some 14% per year, on a compound average basis, trouncing most mutual funds. These companies have performed rather well -- and right under our noses.

  • Along those same lines, be wary of what you don't understand. If you don't understand a business, you probably won't be able to understand when business is going badly. Biotechnology companies are good examples here. Think of Celgene (NASDAQ:CELG) -- if you're invested in it, do you have a good grasp of current and in-the-pipeline treatments for immune-inflammatory-related diseases, transfusion-dependent anemia, myelogenous leukemia, multiple myeloma, ovarian cancer, and more?

  • If you buy into 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 if you still have long-term confidence. Consider Intel (NASDAQ:INTC), which has earned incredible returns for early investors. Many still have high expectations for the company's future performance -- notable investors like George Soros and Marty Whitman are among this group. But the stock is down 33% from its January 2004 highs. If you think Intel is ready for a rebound, this could be a great time to add to your position.

  • Do consider selling at least some of your shares if they hit 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 it's worth, and you still hang on, you're no longer investing -- you're speculating, and at great risk. This is the kind of issue that investors in companies such as Electronic Arts (NASDAQ:ERTS) need to think about. Its stock was recently trading at a P/E ratio of 90-plus (based on trailing-12-month earnings) and a P/E of nearly 40 (based on higher earnings expected in the coming year). Is that reasonable, or has the stock gotten ahead of itself?

  • 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. They have a few losers, of course, but on average their recommendations are up 67%, versus 28% for like amounts invested in the S&P 500.

You can try Stock Advisor free for 30 days for full access to past recommendations. Here's to big profits in your future!

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

Longtime contributor Selena Maranjian owns shares of Time Warner. For more about Selena, view her bio and her profile. Time Warner, Yahoo!, and Electronic Arts are Motley Fool Stock Advisor picks. Intel is an Inside Value choice. The Motley Fool is Fools writing for Fools.