“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 Hologic Inc (NASD: HOLX), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 04/03/2000 |
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| End date: | 04/01/2020 | ||||
| Start price/share: | $1.94 | ||||
| End price/share: | $32.70 | ||||
| Starting shares: | 5,154.64 | ||||
| Ending shares: | 5,154.64 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,585.57% | ||||
| Average annual return: | 15.16% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $168,475.59 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 15.16%. This would have turned a $10K investment made 20 years ago into $168,475.59 today (as of 04/01/2020). On a total return basis, that’s a result of 1,585.57% (something to think about: how might HOLX shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“All the opportunity in the world means nothing if you don’t actually pull the trigger.” — Sam Zell
