Photo credit: commons.wikimedia.org

“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— 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 Laboratory Corporation of America Holdings (NYSE: LH) 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.

LH 20-Year Return Details
Start date: 09/10/1999
$10,000

09/10/1999		 $250,787

09/09/2019
End date: 09/09/2019
Start price/share: $6.88
End price/share: $172.48
Starting shares: 1,453.49
Ending shares: 1,453.49
Dividends reinvested/share: $0.00
Total return: 2,406.98%
Average annual return: 17.47%
Starting investment: $10,000.00
Ending investment: $250,787.39

As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 17.47%. This would have turned a $10K investment made 20 years ago into $250,787.39 today (as of 09/09/2019). On a total return basis, that’s a result of 2,406.98% (something to think about: how might LH shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” — Seth Klarman