“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year period?
Today, let’s look backwards in time to 2010, and take a look at what happened to investors who asked that very question about Monster Beverage Corp (NASD: MNST), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 06/28/2010 |
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| End date: | 06/25/2020 | ||||
| Start price/share: | $6.74 | ||||
| End price/share: | $69.06 | ||||
| Starting shares: | 1,483.68 | ||||
| Ending shares: | 1,483.68 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 924.63% | ||||
| Average annual return: | 26.20% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $102,469.25 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 26.20%. This would have turned a $10K investment made 10 years ago into $102,469.25 today (as of 06/25/2020). On a total return basis, that’s a result of 924.63% (something to think about: how might MNST shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” — Peter Lynch
