“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Mohawk Industries, Inc. (NYSE: MHK) back in 2010: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 08/24/2010 |
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| End date: | 08/21/2020 | ||||
| Start price/share: | $43.54 | ||||
| End price/share: | $90.32 | ||||
| Starting shares: | 229.67 | ||||
| Ending shares: | 229.67 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 107.44% | ||||
| Average annual return: | 7.57% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,744.92 | ||||
The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 7.57%. This would have turned a $10K investment made 10 years ago into $20,744.92 today (as of 08/21/2020). On a total return basis, that’s a result of 107.44% (something to think about: how might MHK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Most investors want to do today what they should have done yesterday.” — Larry Summers
