“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a two-decade holding period for an investor who was considering F5 Networks, Inc. (NASD: FFIV) back in 1999, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 06/07/1999 |
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| End date: | 04/26/2019 | ||||
| Start price/share: | $7.75 | ||||
| End price/share: | $159.87 | ||||
| Starting shares: | 1,290.32 | ||||
| Ending shares: | 1,290.32 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,962.84% | ||||
| Average annual return: | 16.43% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $206,348.33 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 16.43%. This would have turned a $10K investment made 20 years ago into $206,348.33 today (as of 04/26/2019). On a total return basis, that’s a result of 1,962.84% (something to think about: how might FFIV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“I’d like to live as a poor man with lots of money.” — Pablo Picasso
