“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?
Today, let’s look backwards in time to 2009, and take a look at what happened to investors who asked that very question about Ansys Inc. (NASD: ANSS), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 10/26/2009 |
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| End date: | 10/24/2019 | ||||
| Start price/share: | $43.12 | ||||
| End price/share: | $221.52 | ||||
| Starting shares: | 231.91 | ||||
| Ending shares: | 231.91 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 413.73% | ||||
| Average annual return: | 17.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $51,370.70 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.78%. This would have turned a $10K investment made 10 years ago into $51,370.70 today (as of 10/24/2019). On a total return basis, that’s a result of 413.73% (something to think about: how might ANSS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Searching for companies is like looking for grubs under rocks: if you turn over 10 rocks you’ll likely find one grub; if you turn over 20 rocks you’ll find two.” — Peter Lynch
