“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 two-decade 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 Dollar Tree Inc (NASD: DLTR), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 03/02/2000 |
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| End date: | 02/28/2020 | ||||
| Start price/share: | $8.39 | ||||
| End price/share: | $83.03 | ||||
| Starting shares: | 1,191.90 | ||||
| Ending shares: | 1,191.90 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 889.63% | ||||
| Average annual return: | 12.14% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $98,965.47 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 12.14%. This would have turned a $10K investment made 20 years ago into $98,965.47 today (as of 02/28/2020). On a total return basis, that’s a result of 889.63% (something to think about: how might DLTR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman
