“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: | 12/27/1999 |
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| End date: | 12/24/2019 | ||||
| Start price/share: | $285.88 | ||||
| End price/share: | $85.73 | ||||
| Starting shares: | 34.98 | ||||
| Ending shares: | 34.98 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | -70.01% | ||||
| Average annual return: | -5.84% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $3,000.45 | ||||
As shown above, the two-decade investment result worked out poorly, with an annualized rate of return of -5.84%. This would have turned a $10K investment made 20 years ago into $3,000.45 today (as of 12/24/2019). On a total return basis, that’s a result of -70.01% (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.]
Here’s one more great investment quote before you go:
“If you’re looking for a home run, a great investment for five years or 10 years or more, then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge.” — Ralph Wanger
