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What is a Ten-Bagger?

Posted By Jim On 08/31/2010 @ 7:06 am In Investing | 16 Comments

I was reading my latest issue of the Motley Fool Stock Advisor when I saw them use a term I’ve always found entertaining – ten-bagger. The newsletter itself was talking about how Netflix has become a ten-bagger since David Gardner’s recommendation in 2004. The term ten-bagger refers to a stock that is worth 10 times more than its original purchase price, or an appreciation of 900% over the holding period.

The origins of the term are from One Up On Wall Street by Peter Lynch [3] and it’s most often cited by long and hold investors because it’s so hard to do. Before a stock is worth 900% more than what you paid for it, it has to be worth 200% and 300% and 500%. All the while you have to stick with it, before it’ll reach 900%. And when it does become a ten-bagger, that doesn’t mean you should sell it, it’s as meaningless a benchmark as any other (the market has no idea where you purchased it).

The closest I’ve ever come is a hair over 200% on shares of Apple stock I purchased early last year when Steve Jobs took medical leave in early 2009 [4].

Do you have a ten-bagger?


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[3] One Up On Wall Street by Peter Lynch: http://www.bargaineering.com/articles/r/amazon.php?asin=0743200403

[4] medical leave in early 2009: http://tech.fortune.cnn.com/2009/03/06/june-8-the-day-steve-jobs-returns/

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