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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— 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 ten year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Discovery Inc – Series C (NASD: DISCK) back in 2009. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 10/08/2009


End date: 10/07/2019
Start price/share: $13.99
End price/share: $25.44
Starting shares: 714.80
Ending shares: 714.80
Dividends reinvested/share: $0.00
Total return: 81.84%
Average annual return: 6.16%
Starting investment: $10,000.00
Ending investment: $18,183.61

The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 6.16%. This would have turned a $10K investment made 10 years ago into $18,183.61 today (as of 10/07/2019). On a total return basis, that’s a result of 81.84% (something to think about: how might DISCK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” — Warren Buffett