Holding your nerve amid volatility is not as easy as it seems – New Capital Global Equity Conviction Fund

by | Jul 6, 2022

Share this article

Written by Jonathan Rawicz and Haichuan Yu, co-managers of the New Capital Global Equity Conviction Fund

A common regret we often hear is: “Why didn’t I buy Amazon/Netflix/Apple stocks 15 years ago?”

A $100 investment in these stocks back in 2005, would turn into $18,683 (Netflix), $6,384 (Apple) or $4,048 (Amazon) 15 years later. The same $100 invested in the S&P 500 index would have returned $267.

But, even if you did buy these stocks in 2005, would you have held onto them? These are dominant market players today, but their growth trajectory has not always been smooth. Let’s take a closer look:


Case Study 1: Netflix in 2012

Netflix started as a DVD rental company and launched video streaming in 2007. By 2011, its streaming subscribers exceeded 20 million. In September 2011, Reed Hastings split the streaming business from DVD rental and raised prices. Customers were outraged. Meanwhile, competition was rising from the likes of Hulu and Amazon. Unprofitable international expansion was disliked by the market. Subscriber growth, the most important metric, stalled. Had Netflix run out of growth?


Its share price plunged by almost 80% between July and December 2011 and stagnated for the whole of 2012.

Case Study 2: Amazon in 2014


In 2014 Amazon’s revenue growth was decelerating, while spending heavily on cloud computing, logistics and media. Margins were also declining, leading to questions around the long-term viability of cloud computing, Prime and e-commerce. 2014 financials were disappointing: revenue growth slowed from 40% in 2011 to 19% in 2014, while operating margin dropped from 4% in 2010 to 0.2% in 2014. Investors would have wondered whether Amazon was ever going to be profitable.

As a result, its share price dropped -22% in 2014, compared to a +12% rise for the S&P 500.

Case Study 3: Apple in 2015


Assume you held onto Apple shares through the 2008 financial crisis and the passing of Steve Jobs. In 2015, Apple was facing problems. The smartphone market began to saturate, replacement cycles lengthened, and competition was rising. Tim Cook was often viewed as lacking innovation. In 2016, iPhone unit sales started to decline, and no new flagship product was in sight. Where was the growth going to come from? Apple’s share price declined -25% between July 2015 and June 2016.

Would you have held onto your Apple stocks having underperformed the S&P 500? One person who went against consensus was Warren Buffett, who began buying Apple shares in 2016.

In conclusion, even for the most successful equity stories, periods of underperformance are inevitable. These periods could last for over a year. That’s why long-term investing is easy in theory but difficult in practice


Share this article

Related articles

Winners of the Protection Guru Awards 2022 are announced

Winners of the Protection Guru Awards 2022 are announced

Protection Guru, has today announced the winners of Protection Guru Awards 2022. In this, their second year, the awards have been established to recognise the leading lights of the protection industry. The team at IFA Magazine extends our congratulations to all this...

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, designed to fit perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode