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“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 Laboratory Corporation of America Holdings (NYSE: LH) 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: 06/08/2009
$10,000

06/08/2009
$27,404

06/05/2019
End date: 06/05/2019
Start price/share: $60.86
End price/share: $166.84
Starting shares: 164.31
Ending shares: 164.31
Dividends reinvested/share: $0.00
Total return: 174.14%
Average annual return: 10.61%
Starting investment: $10,000.00
Ending investment: $27,404.63

The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 10.61%. This would have turned a $10K investment made 10 years ago into $27,404.63 today (as of 06/05/2019). On a total return basis, that’s a result of 174.14% (something to think about: how might LH shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“Smart investing doesn’t consist of buying good assets but of buying assets well. This is a very, very important distinction that very, very few people understand.” — Howard Marks