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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— 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 two-decade holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Copart Inc (NASD: CPRT) back in 1999: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 09/23/1999
$10,000

09/23/1999
$474,507

09/20/2019
End date: 09/20/2019
Start price/share: $1.74
End price/share: $82.58
Starting shares: 5,747.13
Ending shares: 5,747.13
Dividends reinvested/share: $0.00
Total return: 4,645.98%
Average annual return: 21.28%
Starting investment: $10,000.00
Ending investment: $474,507.29

As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 21.28%. This would have turned a $10K investment made 20 years ago into $474,507.29 today (as of 09/20/2019). On a total return basis, that’s a result of 4,645.98% (something to think about: how might CPRT shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch