“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 decade-long holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Edwards Lifesciences Corp (NYSE: EW) back in 2009: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full decade-long investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 10/12/2009 |
|
|||
| End date: | 10/10/2019 | ||||
| Start price/share: | $17.49 | ||||
| End price/share: | $226.09 | ||||
| Starting shares: | 571.76 | ||||
| Ending shares: | 571.76 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,192.68% | ||||
| Average annual return: | 29.17% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $129,305.38 | ||||
The above analysis shows the decade-long investment result worked out exceptionally well, with an annualized rate of return of 29.17%. This would have turned a $10K investment made 10 years ago into $129,305.38 today (as of 10/10/2019). On a total return basis, that’s a result of 1,192.68% (something to think about: how might EW shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch
