“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 decade-long 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 ABIOMED, Inc. (NASD: ABMD), by taking a look at the investment outcome over a decade-long holding period.
| Start date: | 11/20/2009 |
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| End date: | 11/19/2019 | ||||
| Start price/share: | $8.14 | ||||
| End price/share: | $184.34 | ||||
| Starting shares: | 1,228.50 | ||||
| Ending shares: | 1,228.50 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 2,164.62% | ||||
| Average annual return: | 36.60% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $226,400.87 | ||||
As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 36.60%. This would have turned a $10K investment made 10 years ago into $226,400.87 today (as of 11/19/2019). On a total return basis, that’s a result of 2,164.62% (something to think about: how might ABMD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
