“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A critical pearl of wisdom from Warren Buffett teaches us that with any potential stock investment we may make, as soon as our buy order is filled we will have a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).
The reality of this choice forces us to challenge our confidence in any given company we might invest into, and keep our eyes on the long-term time horizon. The market may go up and down the interim, but over a decade-long holding period, will the investment succeed?
Back in 2010, investors may have been asking themselves that very question about Edwards Lifesciences Corp (NYSE: EW). Let’s examine what would have happened over a decade-long holding period, had you invested in EW shares back in 2010 and held on.
Start date: | 04/21/2010 |
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End date: | 04/20/2020 | ||||
Start price/share: | $25.08 | ||||
End price/share: | $224.60 | ||||
Starting shares: | 398.72 | ||||
Ending shares: | 398.72 | ||||
Dividends reinvested/share: | $0.00 | ||||
Total return: | 795.53% | ||||
Average annual return: | 24.50% | ||||
Starting investment: | $10,000.00 | ||||
Ending investment: | $89,580.81 |
The above analysis shows the decade-long investment result worked out exceptionally well, with an annualized rate of return of 24.50%. This would have turned a $10K investment made 10 years ago into $89,580.81 today (as of 04/20/2020). On a total return basis, that’s a result of 795.53% (something to think about: how might EW shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross