“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a twenty year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Micron Technology Inc. (NASD: MU) back in 2000, holding through to today.
| Start date: | 06/15/2000 |
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| End date: | 06/12/2020 | ||||
| Start price/share: | $78.00 | ||||
| End price/share: | $48.69 | ||||
| Starting shares: | 128.21 | ||||
| Ending shares: | 128.21 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | -37.58% | ||||
| Average annual return: | -2.33% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $6,239.76 | ||||
As shown above, the twenty year investment result worked out poorly, with an annualized rate of return of -2.33%. This would have turned a $10K investment made 20 years ago into $6,239.76 today (as of 06/12/2020). On a total return basis, that’s a result of -37.58% (something to think about: how might MU shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“The right time for a company to finance its growth is not when it needs capital, but rather when the market is most receptive to providing capital.” — Michael Milken
