The Roller Coaster of Investing: A SolarEdge Story
Recently, I revisited SolarEdge Technologies (SEDG), a stock I remembered as a solar industry leader that once drove incredible gains for early investors. Let me walk you through its remarkable journey from IPO to today.
This will give away where the story will go, but here is the full chart for reference as we go over its price action:
Now that’s one killer journey!
Imagine investing $1,000 at the IPO price of $20 per share, which would have bought you 50 shares. Six years later, those shares would have skyrocketed to an incredible $18,000. For wealthier investors who initially invested $10,000, their investment would have grown to nearly $200,000 — a dream scenario that seems to validate the “buy and hold” strategy.
But here’s the brutal reality of investing: those gains aren’t permanent.
After two years of relatively stable performance, July 2023 marked a dramatic turning point. In just one year, after holding the stock for seven years (2015 to 2022), the stock plummeted to $10 per share. That $1,000 investment? Now worth just $500.
This is the often-unspoken truth of long-term investing. Big market winners can experience massive pullbacks. While it’s unusual for a market leader to drop below its IPO price years after going public, it happens. And when it does, it’s emotionally devastating.
This is precisely why financial advisors suggest not checking your portfolio too frequently. The emotional toll can be significant. Imagine needing emergency cash and being forced to sell at this low point — it’s a psychological nightmare.
The glamorous stories of $1,000 turning into $37,000 over decades rarely highlight this potential downside. Individual stock picking is incredibly challenging, and your portfolio can easily become a high-stakes emotional roller coaster.
Buy and hold sounds simple, but the reality is far more complex and emotionally taxing than most investment narratives suggest.