“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 Discovery Inc (NASD: DISCA), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 10/19/2009 |
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| End date: | 10/16/2019 | ||||
| Start price/share: | $15.77 | ||||
| End price/share: | $27.80 | ||||
| Starting shares: | 634.12 | ||||
| Ending shares: | 634.12 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 76.28% | ||||
| Average annual return: | 5.83% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,620.59 | ||||
As we can see, the ten year investment result worked out well, with an annualized rate of return of 5.83%. This would have turned a $10K investment made 10 years ago into $17,620.59 today (as of 10/16/2019). On a total return basis, that’s a result of 76.28% (something to think about: how might DISCA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“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
