How You Could Have Turned $1000 into $264 Billion This Year

Did that post title get your attention? It sure got mine!

I saw that headline pop up in my Facebook feed this morning, linking to this article on The Atlantic. I couldn’t resist, I had to read on and learn just how that kind of return was possible. If the secrets to unimaginable wealth were within those words, I wouldn’t be stuck at my desk job while the rest of you went shopping for your own private islands!

The truth, however, is that there’s probably a greater chance of me winning the Powerball jackpot and marrying Kate Upton in 2014 than replicating what is needed for that kind of ROI.

How To Turn $1000 into $264 Billion

All you would have needed to do in order to turn a $1000 investment into $264 Billion over the past year is take your $1000 and invest it all into the best performing stock of the S&P 500…and then repeat the process every day for the entire year. Simple, right?! It took Warren Buffett over 50 years to amass his fortune. You could have made your first million dollars by the 3rd week in April and surpassed Mr. Buffett’s fortune in time to brag to your family about it over Thanksgiving dinner!

This is essentially like sitting down at the World Series of Poker main event and shoving all-in (and winning!) on every single hand until you won the tournament (surely giving Norman Chad a brain aneurysm in the process).  It’s utterly insane unless you have a flying DeLorean hidden in your garage.

So, barring the existence of a time machine or a crystal ball to see into the future, there’s no way any of us would be able to know which one of the five-hundred stocks in the S&P 500 would outperform the 499 others on any given day.

Going all-in on a different stock everyday isn’t investing, even if you do have a horseshoe firmly lodged up your butt and pick the right stocks. It’s gambling, and reckless gambling at that.

What To Do Instead

Now obviously neither I, nor The Atlantic was presenting this as a legitimate possibility. It’s just fun to think about, and it is kind of neat to look back and see which stock was the best on each day this past year, read the names and you’ll really doubt the ability of picking the right ones! As is pointed out in the article, even if you think you have 50/50 odds of picking the right stock each day, your odds of guessing right each day would be 1: 3.53 x 10^72. Or one in 3.53 trevigintillion, and no, I can’t verify that trevigintillion isn’t a word one of those cute kids in the AT&T ads made up.

Instead of chasing hot stocks and dreaming of getting rich quickly. The course of action to take is to come up with a sensible asset allocation, pump your money into simple index funds and reap the rewards over time. This strategy trumps actively buying and selling stocks just about every time.

If you were sitting on $1000 and hoping to turn it into billions next year it probably wont happen, but that doesn’t mean you can’t turn that $1000 into something meaningful. Check out my post on how to invest without a lot of money where I show you how to turn a sum as small as $500 into a well-balanced portfolio to get your started on your investing journey.

Readers: If you could go back in time, or could see the future, how would you use it to your financial advantage? Picking the winning lottery numbers? Investing in Apple at $2/share? Betting on sporting events you knew the results of? 

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20 Responses to How You Could Have Turned $1000 into $264 Billion This Year

  1. That’s pretty crazy, and yet the SP500 is up what around 25% for the year? While this idea is clearly unrealistic, I wonder what the results would be for the even more far fetched Russel 5000. Going all in everyday and picking the winner each time. Given a lot of small cap stocks that were much more volatile, I’m sure you’d be in the trillions. If I could go back in time/see the future and could only go with one thing, it’d be to win the lottery. If overnight you could go from whatever your current savings to hundreds of millions, that’s life changing. Even investing or sporting events would take time to build up the same fortune.

  2. Haha, I love headlines like that. You know it’s a “come on” and yet you still want to look. I’m with JC though, I bet if they included penny stocks the total would have greatly exceeded the GDP of the US.

    It would be nice if we could go back in time and pick better stocks….perhaps Berkshire Hathaway or Coke or Microsoft, but that’s not practical. Plus, if we could go back in time……couldn’t everyone else, thereby eliminating our edge?! Nice post
    -Bryan

  3. I mean, it could happen, right? And after I make my first few billion, I’ll teach other people how to do the same by hosting a show on CNBC.

    Which I’ll broadcast from one of my four personal islands.

  4. FatChance says:

    Don’t we all fantasize about going back in time to pick the best stocks? I think I do that every time I hear, “If you invested $1000 in Dell on such and such a date….”
    So if I could go back, I would definitely increase my financial advantage with stock. How freaking cool would it be to not only enrich yourself, but to spread it around? Your friend or relative has a kid. You give them 10 shares of xyz company, wink and tell them, “Cash it when the kid is ready for college, maybe it will be worth a book or two…” knowing you just paid for their school and maybe a house down the road.
    I would kick Jim Kramer’s butt with my own show. “I see Jim likes ABC company, I do not see that one doing so well myself. I like this company instead. I have no idea what he is thinking. I guess we will see who is right sometime in the future.” chuckle
    Anyway, great article. Thanks for the escape from work into a fantasy land where I am a stock picking god.

  5. Wait… you mean you didn’t do this?!?! I’m thinking about doing it in 2014… not sure though… ;)

    Ha! Fun post!

  6. Did the Atlantic factor in transaction costs? If not it might only be like 263 Billion… which is a huge change.

    • I think they mentioned in the article that they didn’t factor in transaction costs, and we probably don’t even want to think about taxes on all those short term capital gains!

  7. Moneycone says:

    ” Investing in Apple at $2/share?” Not at $2 but when it was in double digits – much before the iPads and iPhones! Like Buffett says, you one need one or two home runs – that was mine!

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  9. There were a few stocks that I was thinking about when very young, actually high school. But it was a long time ago, right before the tech bubble. I barely had funds, but I really wanted to throw it in stocks – but I was risk averse, thought I was too young, etc. It could have created a different ballgame for me after years of compound growth. Oh well….always interesting to think of what could’ve been..

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  11. Martin says:

    Well, you really got my attention with that title. I was already rejoicing over getting rich quickly and then found out that all I would have to do to pick that very best stock every day or week. It really is a piece of cake.

    So I once again have to stay with my DGI strategy and options selling. :(

  12. Sandy says:

    Where do you think the market is headed in 2014? I feel like it’s too good to be true and the wave is about to crash any day now.

    • I don’t think anything that’s been happening is too good to be true. I think the stock market gains may have outpaced the improvement in the overall economy, but things seem to be looking up on all fronts. So hopefully the trend will continue for at least one more year! But if I really knew what the market was going to do I wouldn’t be writing here, I’d be laying back relaxing on my own island by now :)

  13. I sure could have used $264 billion, haha. I was too young to be investing in Apple at $2/share, but it is eye opening to be looking at opportunities.

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