“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 F5 Networks, Inc. (NASD: FFIV) 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: | 09/13/1999 |
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| End date: | 09/11/2019 | ||||
| Start price/share: | $36.63 | ||||
| End price/share: | $142.32 | ||||
| Starting shares: | 273.00 | ||||
| Ending shares: | 273.00 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 288.53% | ||||
| Average annual return: | 7.02% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $38,863.43 | ||||
The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 7.02%. This would have turned a $10K investment made 20 years ago into $38,863.43 today (as of 09/11/2019). On a total return basis, that’s a result of 288.53% (something to think about: how might FFIV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
