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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 Alexion Pharmaceuticals Inc. (NASD: ALXN) 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: 04/17/2000


End date: 04/15/2020
Start price/share: $10.44
End price/share: $96.94
Starting shares: 957.85
Ending shares: 957.85
Dividends reinvested/share: $0.00
Total return: 828.54%
Average annual return: 11.78%
Starting investment: $10,000.00
Ending investment: $92,828.13

As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 11.78%. This would have turned a $10K investment made 20 years ago into $92,828.13 today (as of 04/15/2020). On a total return basis, that’s a result of 828.54% (something to think about: how might ALXN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham