Photo credit:

“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a two-decade holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into O’Reilly Automotive, Inc. (NASD: ORLY) back in 2000: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 08/11/2000


End date: 08/10/2020
Start price/share: $7.94
End price/share: $461.15
Starting shares: 1,259.45
Ending shares: 1,259.45
Dividends reinvested/share: $0.00
Total return: 5,707.93%
Average annual return: 22.50%
Starting investment: $10,000.00
Ending investment: $580,346.87

As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 22.50%. This would have turned a $10K investment made 20 years ago into $580,346.87 today (as of 08/10/2020). On a total return basis, that’s a result of 5,707.93% (something to think about: how might ORLY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.” — Seth Klarman