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The Growth and Risks of Amazon Stock: A Millionaire Maker or Roller Coaster Ride?

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Amazon’s Role in Millionaire Making

Amazon, with its stellar track record, has turned early investors into wealthy individuals. Over the last decade, its shares surged almost 1,000%, making it a standout performer in the market. Notably, in the past year alone, the stock witnessed a robust 70% increase.

If one had invested $10,000 in Amazon stock back in 2000, right before the dot-com crash, that investment would now be valued at over $470,000. While it may not quite reach the million-dollar mark, it significantly outperformed the S&P 500 Index, which would have yielded around $35,000 today. Holding onto Amazon shares back then would have been a pivotal step towards achieving millionaire status.

Amazon’s success is not accidental but a consequence of its bold experiments that pay off, coupled with its dominant presence in online retail and cloud computing. With a market cap of $1.8 trillion and ample cash reserves, Amazon is well-positioned to continue its streak of success in the future.

Navigating the Volatility of Amazon Stock

Despite its impressive returns, owning Amazon stock comes with significant risks. The stock experienced a staggering 4,630% return between 2000 and 2023, but weathered severe downturns, notably losing over 80% of its value during the dot-com bubble burst. Subsequent hits during the Great Recession and recent years further underscore the extreme volatility that Amazon shares exhibit.

The highs and lows of Amazon’s stock price far surpass those of the S&P 500 Index, demanding a staunch resolve from investors to weather such turbulence. While Amazon has the potential to pave the way to millionaire status, placing all your bets on one stock exposes you to immense risk and emotional strain, potentially leading to untimely decisions driven by fear.

The Emotional Challenge of Investing in Amazon

Investing in Amazon or any single stock, while seemingly straightforward, involves navigating a complex interplay of emotions amidst market fluctuations. Achieving success akin to Warren Buffett’s sage advice requires not just intelligence but also emotional resilience, a trait often lacking in most investors facing the unpredictable nature of the market. Building a diversified portfolio or including Amazon alongside index ETFs offers a more stable and sustainable approach to wealth creation.

Investor’s Dilemma: Should You Invest in Amazon Now?

Before diving into Amazon stock, it’s crucial to consider all angles. While Amazon has a rich history of success, diversifying your investments with other potentially lucrative opportunities might safeguard you against the inherent risks of backing a single stock.

According to the Motley Fool Stock Advisor, Amazon didn’t make the list of the top 10 stocks for potential investors. The chosen stocks are predicted to yield substantial returns in the upcoming years. The Stock Advisor offers a comprehensive strategy for investors, with insights on portfolio building and regular updates, outperforming the S&P 500 by a significant margin since 2002.

Explore the 10 recommended stocks for potential investment opportunities.

John Mackey, former CEO of Whole Foods Market and an Amazon subsidiary, serves on The Motley Fool’s board of directors. Reuben Gregg Brewer has no personal stake in the mentioned stocks. The Motley Fool is a proponent of Amazon but maintains a disclosure policy.

The viewpoints expressed in this piece solely represent the author’s perspective and do not necessarily align with those of Nasdaq, Inc.

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