Holding on to winning stocks can be a challenge, especially when there are market corrections or they drop significantly in value. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on April 22, Fool.com contributors Matt Frankel and Jason Hall look at one company that has posted extraordinary returns for nearly 30 years.
Matt Frankel: One of my favorite stocks to give this example for historical context of holding your winners is a little-known homebuilder called NVR (NVR -0.43%). I'm sure you're familiar with them, Jason.
Jason Hall: Yes, but we're pretty sure their management team are robots.
Frankel: I'm pretty sure they are too. They're the company behind Ryan Homes is their big public brand name. They're a new homebuilder, they went public in 1993. Since that time, and let me share this real quick and I'll be quick with this example, but look at how many times that stock is drawn by 40% or more off the highs. It's done that on 1, 2, 3, 4, 5, 6 separate occasions, it's dropped by 40% or more from the highs. It's dropped by 60% from the highs ones in the late 2000s when the housing market was just not where you wanted to be at all. A lot of people said maybe it's going to keep going down. But if you kept holding it, check out what would have happened over the long-term, 43,000% total returns since 1993.
Hall: Makes Amazon (AMZN -1.45%) look like a mistake. [laughs]
Frankel: This is from a relatively boring homebuilding business that has drawn down by 40% or more six different times. Imagine if you would have got shaken out the first time it dropped by 40%, which a lot of people did, that's why it dropped because people were selling. But it's a great well-run business and those returns don't lie. Just to put that into perspective, that means a $1,000 investment would be I think, what 435?
Hall: $434,000.
Frankel: $430,000. It's a pretty impressive story and it wasn't a linear rise. It looks linear when you zoom out like that or looks parabolic almost when you zoom out like that, but it was not a linear rise and there's a lot of companies that this has happened to on lesser extents.