Imagine selling the NASDAQ before a legendary 1000% return while every prediction made about the internet slowly came true. Several people did. In fact, 20 years ago, you couldn’t give the stocks away.

In August of 2001, Merrill Lynch (ML) closed their wildly popular Internet Strategies fund. After all, the fund had managed to lose 71% just 15 months from inception.

Coming to market the prior spring, the fund had enormous fanfare. Investor demand for internet-focused investment vehicles was undeniable in those days; the ML fund took less than 2 weeks to reach a Billion in assets.

History would prove the fund’s timing couldn’t have been worse; It came to market just 2 weeks after the NASDAQ peaked at 5000. By October of 2001, the Nasdaq had dropped 3500 points to settle just below 1500.

Investors lost billions in the internet space and were racing for the exits.

Wall Street couldn’t keep people interested in the wake of the crash. Internet funds closed and changed their name rapidly. Lipper Analyst Dan Cassidy commented “an internet mutual fund is just too hard of an item for brokers to sell to clients right now”.

Over the short run, investment timing is nearly everything. 2015’s “The Big Short”, had a scene where hedge fund manager Michael Burry argued with a client who saw repeated investment losses:

As the story goes, Burry’s bets eventually paid off in a big way; he became famous enough to spawn a book and movie detailing the trades.

In hindsight, the dot-com-bomb proved to be a great time to hold, if not buy internet companies. The Nasdaq has grown 10-fold from those lows, eclipsing 15,000 recently.

Paul Meeks (the aforementioned ML Internet Strategies manager), alluded to this in a 2001 interview with theStreet.com: “I honestly believe that 80% of (the internet companies) that existed are going to zero… Now the 20% that remains… I’m still bullish. The internet is a theme that’s shaping the world”.

There’s some truth in the joke that the most a speculative investment can gain is unlimited, but the most it can lose is only 100%.

 One of the glaring winners from the era was Amazon, which has grown an astonishing 600-fold from it’s low. Meeks predicted: “Amazon is a story where it’s going to be boom or bust. I think if they succeed, they will be the next Wal-Mart and years from now you’ll say ‘Geez, I could have gotten Amazon at this ridiculously cheap price.’”

Buying Amazon was only obvious in hindsight, and stockholders dealt with a lot of volatility while they waited for profits: Investors in 2000 lost nearly 80% the following year. After all, Prime subscriptions were still 5 years away. Audible, Zappos, Diapers.com, Ring, Whole Foods, or Twitch took years to join the Amazon family.

Whether you’re wrong or early in growth investing depends on your time horizon. Given a short deadline, investments can quickly be scored a winner or loser. But given a long enough runway, early strikeouts can turn into home runs.

Like my dad always said, “If you’re not ready to buy on a 50% drop, you shouldn’t buy growth stocks”.

As with most things in life, being a good investor often means having a long-term vision while being patient, persistent and having a high pain tolerance for the lumps you’ll take over short run.