“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 two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into ABIOMED, Inc. (NASD: ABMD) back in 2000: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 04/24/2000 |
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| End date: | 04/23/2020 | ||||
| Start price/share: | $16.94 | ||||
| End price/share: | $170.76 | ||||
| Starting shares: | 590.32 | ||||
| Ending shares: | 590.32 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 908.03% | ||||
| Average annual return: | 12.24% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $100,809.79 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 12.24%. This would have turned a $10K investment made 20 years ago into $100,809.79 today (as of 04/23/2020). On a total return basis, that’s a result of 908.03% (something to think about: how might ABMD 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:
“Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard.” — Warren Buffett
ABMD
