“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 2000, and take a look at what happened to investors who asked that very question about Amazon.com Inc (NASD: AMZN), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 01/13/2000 |
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| End date: | 01/10/2020 | ||||
| Start price/share: | $65.94 | ||||
| End price/share: | $1,883.16 | ||||
| Starting shares: | 151.66 | ||||
| Ending shares: | 151.66 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 2,755.98% | ||||
| Average annual return: | 18.24% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $285,553.26 | ||||
As shown above, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 18.24%. This would have turned a $10K investment made 20 years ago into $285,553.26 today (as of 01/10/2020). On a total return basis, that’s a result of 2,755.98% (something to think about: how might AMZN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” — Shelby Davis
