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

— 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 twenty year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Monster Beverage Corp (NASD: MNST) back in 1999. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 09/17/1999


End date: 09/16/2019
Start price/share: $0.83
End price/share: $59.23
Starting shares: 12,048.19
Ending shares: 12,048.19
Dividends reinvested/share: $0.00
Total return: 7,036.14%
Average annual return: 23.77%
Starting investment: $10,000.00
Ending investment: $713,383.04

As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 23.77%. This would have turned a $10K investment made 20 years ago into $713,383.04 today (as of 09/16/2019). On a total return basis, that’s a result of 7,036.14% (something to think about: how might MNST 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:
“The best stock to buy is the one you already own.” — Peter Lynch