“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a two-decade holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 20 years to 1999, investors considering an investment into shares of Take-Two Interactive Software, Inc. (NASD: TTWO) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.
| Start date: | 11/19/1999 |
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| End date: | 11/18/2019 | ||||
| Start price/share: | $8.63 | ||||
| End price/share: | $123.15 | ||||
| Starting shares: | 1,158.75 | ||||
| Ending shares: | 1,158.82 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,327.09% | ||||
| Average annual return: | 14.21% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $142,795.66 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 14.21%. This would have turned a $10K investment made 20 years ago into $142,795.66 today (as of 11/18/2019). On a total return basis, that’s a result of 1,327.09% (something to think about: how might TTWO shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“You make most of your money in a bear market, you just don’t realize it at the time.” — Shelby Davis
