“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 two-decade holding period, will the investment succeed?
Back in 2000, investors may have been asking themselves that very question about Illumina Inc (NASD: ILMN). Let’s examine what would have happened over a two-decade holding period, had you invested in ILMN shares back in 2000 and held on.
|Average annual return:||16.08%|
The above analysis shows the two-decade investment result worked out exceptionally well, with an annualized rate of return of 16.08%. This would have turned a $10K investment made 20 years ago into $191,590.48 today (as of 05/15/2020). On a total return basis, that’s a result of 1,814.29% (something to think about: how might ILMN 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:
“Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” — Seth Klarman