That 2014 $10k Investment In CDNS Really Worked

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— Warren Buffett

A critical pearl of wisdom from Warren Buffett teaches us that with any potential stock investment we may make, as soon as our buy order is filled we will have a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).

The reality of this choice forces us to challenge our confidence in any given company we might invest into, and keep our eyes on the long-term time horizon. The market may go up and down the interim, but over a five year holding period, will the investment succeed?

Back in 2014, investors may have been asking themselves that very question about Cadence Design Systems Inc (NASD: CDNS). Let’s examine what would have happened over a five year holding period, had you invested in CDNS shares back in 2014 and held on.

CDNS 5-Year Return Details
Start date:	12/26/2014	$10,000 12/26/2014 $36,100 12/24/2019
End date:	12/24/2019
Start price/share:	$19.29
End price/share:	$69.65
Starting shares:	518.40
Ending shares:	518.40
Dividends reinvested/share:	$0.00
Total return:	261.07%
Average annual return:	29.29%
Starting investment:	$10,000.00
Ending investment:	$36,100.98

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 29.29%. This would have turned a $10K investment made 5 years ago into $36,100.98 today (as of 12/24/2019). On a total return basis, that’s a result of 261.07% (something to think about: how might CDNS shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“All intelligent investing is value investing: acquiring more that you are paying for. You must value the business in order to value the stock.” — Charlie Munger