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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into O’Reilly Automotive, Inc. (NASD: ORLY) back in 2000: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 04/20/2000


End date: 04/17/2020
Start price/share: $6.38
End price/share: $373.51
Starting shares: 1,567.40
Ending shares: 1,567.40
Dividends reinvested/share: $0.00
Total return: 5,754.39%
Average annual return: 22.56%
Starting investment: $10,000.00
Ending investment: $585,408.67

As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 22.56%. This would have turned a $10K investment made 20 years ago into $585,408.67 today (as of 04/17/2020). On a total return basis, that’s a result of 5,754.39% (something to think about: how might ORLY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil