This US stock outperforms NVIDIA: Annualized return of 39%! Investment guru "T God" reveals secret after accurate purchase.

In the investment market, there is a saying that "past performance does not guarantee future results." It is common knowledge that just because a specific investment has recently risen in value does not mean it will continue to appreciate. Similarly, if the performance of one segment of the market is better than another, it does not guarantee that this trend will continue.

However, investors can still gain inspiration from past successful investment experiences. Let's take a look at the major stock investment success stories of the past 20 years. Which well-known company has provided the highest total return? Apple, NVIDIA, or Tesla?

None of them! Among the constituents of the S&P 500 index, the highest 20-year return is from Monster Beverage (MNST.US). If you had invested $1,000 in this energy drink manufacturer 20 years ago, its value would now exceed $830,000. Fidelity fund manager Joel Tillinghast bought shares of Monster Beverage in 2001. Tillinghast, known as "T God," may not be very well-known, but he manages a very large fund. He has been at the helm of the Fidelity Low-Priced Stock Fund since its inception in 1989.

Tillinghast considers Monster Beverage to be one of his best stock picks ever. Here are his views on why he bought and held this stock, as well as the investment knowledge he gained from it.

What can Tillinghast's success teach investors?

Tillinghast acquired Monster Beverage at a price of $4 per share, but considering the number of stock splits the company has undergone, this is actually equivalent to $0.04 per share. Today, the stock is priced at $56.

However, the Monster Beverage that Tillinghast invested in at the time is completely different from the situation today. He said, "I bought Monster Beverage - then known as Hansen's Natural Juice Company - because I liked their attempt at an energy drink. I like companies that try a lot of experiments. They may not always be successful, but they do try a lot of things. I think the company is very innovative in this regard."

In other words, Tillinghast likes companies that provide him with multiple ways to win. However, he does not buy stocks of any company that tries new things. Unless he believes that the trading price of a stock is lower than its long-term value, he will never touch it.

Tillinghast believes that the ideal stock "may have a (price-to-earnings) ratio lower than the market, a high free cash flow yield (measuring the ratio of a company's free cash flow to its market value), and the potential for growth because the company is doing something special that customers really like."Two Rules for Stock Selection and Profit

Even if investors believe in a company's financial condition and long-term prospects, they still need to do more to follow Tillinghast's investment path. One is long-term holding. This means holding a stock that investors believe will continue to perform well, even if it experiences a short-term decline. He said, "When you think something good is going to happen, you must have extraordinary patience."

Another typical example is NVIDIA (NVDA.US). During the period from November 2021 to October 2022, even though the stock's market value evaporated by more than 60%, long-term investors could sell the stock at any time during the price decline and still make a lot of money. After all, at the lowest point in 2022, the stock was priced at $112 per share - a huge return compared to a few dollars ten years ago.

Moreover, with the explosive growth of artificial intelligence technology, investors who sold the stock in 2022 missed out on the huge profits brought by this year's AI boom. And NVIDIA, at the center of the AI boom, currently has a stock price of around $465 per share.

Another piece of advice from Tillinghast is to constantly reevaluate the stocks you like and, if you still like them, increase your position - but be mindful that their proportion in a diversified investment portfolio should be relatively small.

He said, "To invest like me, you need to have a long-term perspective. Think about how much income you will have in five years. Take some time to consider your possibilities. If there is a very outstanding long-term story, but it is indeed undervalued, then make it big - it doesn't have to account for 20% of your investment portfolio, but if you think its narrative is grand, it's good to put it in an important position."