“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a two-decade holding period for an investor who was considering Carmax Inc. (NYSE: KMX) back in 1999, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 09/07/1999 |
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| End date: | 09/04/2019 | ||||
| Start price/share: | $1.84 | ||||
| End price/share: | $84.97 | ||||
| Starting shares: | 5,434.78 | ||||
| Ending shares: | 5,434.78 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 4,517.93% | ||||
| Average annual return: | 21.12% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $462,139.64 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 21.12%. This would have turned a $10K investment made 20 years ago into $462,139.64 today (as of 09/04/2019). On a total return basis, that’s a result of 4,517.93% (something to think about: how might KMX 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:
“Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don’t make.” — Donald Trump
