“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 twenty year period?
Today, let’s look backwards in time to 1999, and take a look at what happened to investors who asked that very question about Berkshire Hathaway Inc New (NYSE: BRK.B), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 12/20/1999 |
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| End date: | 12/17/2019 | ||||
| Start price/share: | $35.12 | ||||
| End price/share: | $227.05 | ||||
| Starting shares: | 284.74 | ||||
| Ending shares: | 284.74 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 546.50% | ||||
| Average annual return: | 9.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $64,667.57 | ||||
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 9.78%. This would have turned a $10K investment made 20 years ago into $64,667.57 today (as of 12/17/2019). On a total return basis, that’s a result of 546.50% (something to think about: how might BRK.B 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:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham
