“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 Micron Technology Inc. (NASD: MU). Let’s examine what would have happened over a decade-long holding period, had you invested in MU shares back in 2010 and held on.
|Average annual return:||14.84%|
As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 14.84%. This would have turned a $10K investment made 10 years ago into $39,896.23 today (as of 04/23/2020). On a total return basis, that’s a result of 299.00% (something to think about: how might MU shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Charlie Munger