“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 twenty year holding period for an investor who was considering DaVita Inc (NYSE: DVA) back in 2000, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 08/04/2000 |
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| End date: | 08/03/2020 | ||||
| Start price/share: | $2.50 | ||||
| End price/share: | $87.21 | ||||
| Starting shares: | 4,000.00 | ||||
| Ending shares: | 4,000.00 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 3,388.40% | ||||
| Average annual return: | 19.42% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $348,647.07 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 19.42%. This would have turned a $10K investment made 20 years ago into $348,647.07 today (as of 08/03/2020). On a total return basis, that’s a result of 3,388.40% (something to think about: how might DVA shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“Every once in a while, the market does something so stupid it takes your breath away.” — Jim Cramer
