“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year holding period for an investor who was considering Illumina Inc (NASD: ILMN) back in 2010, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 08/27/2010 |
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| End date: | 08/26/2020 | ||||
| Start price/share: | $44.03 | ||||
| End price/share: | $353.56 | ||||
| Starting shares: | 227.12 | ||||
| Ending shares: | 227.12 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 703.00% | ||||
| Average annual return: | 23.15% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $80,322.96 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 23.15%. This would have turned a $10K investment made 10 years ago into $80,322.96 today (as of 08/26/2020). On a total return basis, that’s a result of 703.00% (something to think about: how might ILMN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” — Warren Buffett
