“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a twenty year period?
Today, let’s look backwards in time to 2000, and take a look at what happened to investors who asked that very question about United Rentals Inc (NYSE: URI), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 06/16/2000 |
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| End date: | 06/15/2020 | ||||
| Start price/share: | $18.31 | ||||
| End price/share: | $147.04 | ||||
| Starting shares: | 546.08 | ||||
| Ending shares: | 546.08 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 702.95% | ||||
| Average annual return: | 10.97% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $80,279.96 | ||||
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 10.97%. This would have turned a $10K investment made 20 years ago into $80,279.96 today (as of 06/15/2020). On a total return basis, that’s a result of 702.95% (something to think about: how might URI 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:
“Ensure management’s interests are aligned with shareholders.” — Sam Zell
