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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

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a decade-long holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of DaVita Inc (NYSE: DVA) back in 2009. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 07/08/2009


End date: 07/05/2019
Start price/share: $25.37
End price/share: $58.27
Starting shares: 394.17
Ending shares: 394.17
Dividends reinvested/share: $0.00
Total return: 129.68%
Average annual return: 8.67%
Starting investment: $10,000.00
Ending investment: $22,961.37

As shown above, the decade-long investment result worked out well, with an annualized rate of return of 8.67%. This would have turned a $10K investment made 10 years ago into $22,961.37 today (as of 07/05/2019). On a total return basis, that’s a result of 129.68% (something to think about: how might DVA 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:
“In the end, how your investments behave is much less important than how you behave.” — Benjamin Graham