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Back in the depths of 2020, Rolls Royce Holdings (LSE: RR.) Shares fell below 40 pence.
The company was under increasing pressure because it had a debt load that could potentially overwhelm it to a crippling extent, and the fears that such a venerable British name in the aerospace industry could go bust were justified.
Even two years later, towards the end of 2022, a brief recovery had faded and the stock was down around 70 pence.
If you had told me back then that Rolls-Royce’s share price would experience one of the strongest rallies for growth stocks ever, breaking the 500p mark by August 2024, I would have laughed.
Eggface
Well, I would have tried not to be rude and laugh in your face. But I would have giggled and shook my head quietly.
But today my face would be the highlight. And you, dear imaginary reader, would be the one laughing about it.
But I’m not going to just mumble to myself and talk about how right I might have been about some other stocks. No, I think we can learn from the stocks we were wrong about and not hide from them.
But first: How much profit would I have actually made if I had bought some shares back in those dark days?
Big win
Now, the 40p share price I spoke of was almost four years ago. And at the 52-week peak in August this year, Rolls reached 505p.
If I had invested £5,000 in Rolls-Royce shares back then, I could have reached the impressive sum of £63,125. Perhaps it is a little consolation to me that I did not have that much to invest back then.
But even £500 could be worth £6,300 plus change today.
Hmm, that might be a lesson. Sometimes a weak stock can seem too risky to seriously invest in.
But if I see at least a 50% chance of getting a refund, maybe it’s still worth risking a small amount? I suspect in my younger years I would have risked that £500.
Second bite
And when shares were trading at 70p at the end of 2022, the risk had gone down somewhat. That same £5,000 could have grown to £36,000 today. And that would still be a very big gain, and in just half the time.
However, there is another side to this, and I think we should never forget this side when we are upset about missed opportunities.
No one has ever lost money because they didn’t buy a stock.
Has any famous investor ever said that? Maybe one day I’ll be famous and then I’ll say it.
Stupid attitude
So what’s the point of all this? My somewhat humorous look at how I missed out on a big multibagger stock?
Well, the only thing we really can’t use to check the quality of our past decisions is hindsight. We can’t judge based on knowledge that wasn’t available to us at the time.
We just need to make enough good decisions throughout our lives. And a key part of that is following one important rule: never lose money. And yes, a famous investor once said that.
