“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a twenty year holding period for an investor who was considering Incyte Corporation (NASD: INCY) back in 2000, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 05/15/2000 |
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| End date: | 05/13/2020 | ||||
| Start price/share: | $34.09 | ||||
| End price/share: | $96.45 | ||||
| Starting shares: | 293.34 | ||||
| Ending shares: | 293.34 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 182.93% | ||||
| Average annual return: | 5.34% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,317.31 | ||||
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 5.34%. This would have turned a $10K investment made 20 years ago into $28,317.31 today (as of 05/13/2020). On a total return basis, that’s a result of 182.93% (something to think about: how might INCY 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:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
