“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Waters Corp. (NYSE: WAT) back in 2009: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 06/22/2009 |
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| End date: | 06/19/2019 | ||||
| Start price/share: | $49.16 | ||||
| End price/share: | $210.39 | ||||
| Starting shares: | 203.42 | ||||
| Ending shares: | 203.42 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 327.97% | ||||
| Average annual return: | 15.65% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $42,784.20 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 15.65%. This would have turned a $10K investment made 10 years ago into $42,784.20 today (as of 06/19/2019). On a total return basis, that’s a result of 327.97% (something to think about: how might WAT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” — Seth Klarman
