“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 decade-long holding period for an investor who was considering Carmax Inc. (NYSE: KMX) back in 2009, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 07/16/2009 |
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| End date: | 07/15/2019 | ||||
| Start price/share: | $15.37 | ||||
| End price/share: | $88.79 | ||||
| Starting shares: | 650.62 | ||||
| Ending shares: | 650.62 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 477.68% | ||||
| Average annual return: | 19.16% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $57,744.89 | ||||
As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 19.16%. This would have turned a $10K investment made 10 years ago into $57,744.89 today (as of 07/15/2019). On a total return basis, that’s a result of 477.68% (something to think about: how might KMX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
