Key Points
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Investors should always consider valuations before making investment decisions.
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The stocks listed here have risen by more than 300% in just the past 12 months.
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Excitement around these businesses has sent them to absurdly high valuations.
- 10 stocks we like better than Palantir Technologies ›
If you ignore a stock’s valuation when you make a decision to buy it, you could be adding some significant risk to your portfolio. Valuations matter significantly, as buying at inflated prices could limit your future returns.
My favorite example of this is Microsoft. Did you know that if you’d held the stock since Jan. 1, 2000 (before the dot-com bubble crashed), your return would be worse than if you’d bought it 16 years later? The stock has risen by 860% since 2016, versus 813% since 2000.
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