“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Booking Holdings Inc (NASD: BKNG) back in 1999: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 04/12/1999 |
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| End date: | 04/10/2019 | ||||
| Start price/share: | $76.56 | ||||
| End price/share: | $1,806.00 | ||||
| Starting shares: | 130.61 | ||||
| Ending shares: | 130.61 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 2,258.86% | ||||
| Average annual return: | 17.11% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $235,745.50 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 17.11%. This would have turned a $10K investment made 20 years ago into $235,745.50 today (as of 04/10/2019). On a total return basis, that’s a result of 2,258.86% (something to think about: how might BKNG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Spend each day trying to be a little wiser than you were when you woke up.” — Charlie Munger
