“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Akamai Technologies Inc (NASD: AKAM)? Today, we examine the outcome of a two-decade investment into the stock back in 1999.
| Start date: | 11/22/1999 |
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| End date: | 11/20/2019 | ||||
| Start price/share: | $184.88 | ||||
| End price/share: | $86.86 | ||||
| Starting shares: | 54.09 | ||||
| Ending shares: | 54.09 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | -53.02% | ||||
| Average annual return: | -3.70% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $4,703.18 | ||||
As we can see, the two-decade investment result worked out poorly, with an annualized rate of return of -3.70%. This would have turned a $10K investment made 20 years ago into $4,703.18 today (as of 11/20/2019). On a total return basis, that’s a result of -53.02% (something to think about: how might AKAM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger
