“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 twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Electronic Arts, Inc. (NASD: EA)? Today, we examine the outcome of a twenty year investment into the stock back in 1999.
| Start date: | 12/23/1999 |
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| End date: | 12/20/2019 | ||||
| Start price/share: | $84.81 | ||||
| End price/share: | $107.95 | ||||
| Starting shares: | 117.91 | ||||
| Ending shares: | 117.91 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 27.28% | ||||
| Average annual return: | 1.21% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $12,720.29 | ||||
The above analysis shows the twenty year investment result worked out as follows, with an annualized rate of return of 1.21%. This would have turned a $10K investment made 20 years ago into $12,720.29 today (as of 12/20/2019). On a total return basis, that’s a result of 27.28% (something to think about: how might EA 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:
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” — Peter Lynch
