“The reason that more people don’t make 10,000% on their money is that they don’t set their goals high enough!” ~ Thomas W. Phelps
100 to 1 in the Stock Market by Thomas W. Phelps, was an investment book published in 1972. It outlines a buy-and-hold long-term investment strategy aimed at turning $1 into $100 or more—a 10,000% return—by holding stocks for the long term.
Key Points of the Strategy:
• Ultra-Long-Term Holding: Phelps advocates never selling, emphasizing patience and allowing compounding to work over decades.
• Stock Selection: The strategy requires identifying companies with strong business models and growth potential, not necessarily buying at the lowest price or during an IPO.
• Historical Success: Phelps found over 350 stocks between 1932 and 1971 that could have turned $1 into $100 or more, with at least one such stock every year.
• Why It’s Rare: Most investors sell too soon, seeking quick profits, and do not set such ambitious goals. Phelps believed that setting high goals and holding on is key to extraordinary returns.
• Tax Efficiency: Holding stocks indefinitely can defer or avoid capital gains taxes, passing wealth on to heirs.
Modern Examples:
Companies like Home Depot, Microsoft, Amazon, Apple, and NVIDIA have delivered 100-to-1 returns to long-term investors in recent decades.
Core Lessons:
• Patience and conviction are crucial.
• Identify companies with durable competitive advantages (“moats”) and strong growth prospects.
• Avoid frequent trading and short-term thinking.
• A stock should be bought when the company is still small and undiscovered by the masses. Small companies grow faster.
• Seek out “gates,” which are barriers to entry or moats. Patents and market leadership are valuable here.
• Earnings growth is essential. You want to find the most profitable businesses, where earnings are growing fast.
• There is value of buying when stocks are temporarily depressed . . . as they were in 1932 and, more recently, in 2002, 2008 and 2020.
This investment strategy remains contrarian in an era of rapid trading, but the underlying logic—compounding and patience—still applies. The most important aspect of all in the 100 to 1 in the Stock Market equation, however, is time. Mr. Phelps conveyed, “Perhaps the greatest advantage of all in buying top-quality stocks without visible ceilings on their growth is that when we do so we give ourselves the chance to profit by the unforeseeable and the incalculable.”
Source: https://www.cabotwealth.com/daily/stock-market/100-to-1-in-the-stock-market