“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a twenty year period?
Today, let’s look backwards in time to 1999, and take a look at what happened to investors who asked that very question about Biogen Inc (NASD: BIIB), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 04/22/1999 |
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| End date: | 04/18/2019 | ||||
| Start price/share: | $52.94 | ||||
| End price/share: | $226.39 | ||||
| Starting shares: | 188.90 | ||||
| Ending shares: | 188.90 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 327.66% | ||||
| Average annual return: | 7.54% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $42,804.27 | ||||
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 7.54%. This would have turned a $10K investment made 20 years ago into $42,804.27 today (as of 04/18/2019). On a total return basis, that’s a result of 327.66% (something to think about: how might BIIB shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Don’t look for the needle in the haystack, just buy the haystack.” — John Bogle
