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What happened to Garmin stock (GRMN) and what can I learn from that February 10, 2010

Posted by deminvest in GRMN Garmin Stock, nasdaq, Nasdaq stock.
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Some time ago Garming was a powerful fast growing company. On August 17 2006 I decided not to buy Garmin (GRMN) shares because I felt GPS service would become a commodity offered in any smartphone.

Now I wonder: Was i right?

Yes and No:

  1. I was right because GRMN did actually lose 30% from Aug 2006, precisely for the reasons I had guessed
  2. I was right beacuse GRMN did worse than the DOW and the NASDAQ from Aug 2006
  3. I was wrong not to buy because GRMN had temporarily gone up 150% during the timespan between Aug 2006 and today. That would have triggered my free stocks strategy and I would have made earnings.

What did I learn:

  • I can buy cash filled, fast growing healthy companies, even if their business model doesn’t seem to me sustainable in the long run. This is why I did buy RIMM stock last month. When the company is so good, chances are that the stock will go up allowing me to get to my target, before it proves in the log run that I was right about their business model
  • If I have choice, I should prefer cash filled, fast growing healthy companies with a sustainable business model. My free stocks strategy makes me free shares of the stock for a long time. In the long run, it is much better to own free shares of a company with a good business model.

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