“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a twenty year holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 20 years to 1999, investors considering an investment into shares of Take-Two Interactive Software, Inc. (NASD: TTWO) may have been pondering this very question and thinking about their potential investment result over a full twenty year time horizon. Here’s how that would have worked out.
| Start date: | 04/08/1999 |
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| End date: | 04/05/2019 | ||||
| Start price/share: | $6.71 | ||||
| End price/share: | $94.53 | ||||
| Starting shares: | 1,490.31 | ||||
| Ending shares: | 1,490.40 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,308.88% | ||||
| Average annual return: | 14.14% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $140,952.28 | ||||
The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 14.14%. This would have turned a $10K investment made 20 years ago into $140,952.28 today (as of 04/05/2019). On a total return basis, that’s a result of 1,308.88% (something to think about: how might TTWO shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
