“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 decade-long 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 Adobe Inc (NASD: ADBE), by taking a look at the investment outcome over a decade-long holding period.
| Start date: | 10/04/2010 |
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| End date: | 10/01/2020 | ||||
| Start price/share: | $25.60 | ||||
| End price/share: | $499.51 | ||||
| Starting shares: | 390.62 | ||||
| Ending shares: | 390.62 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,851.21% | ||||
| Average annual return: | 34.60% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $195,186.87 | ||||
The above analysis shows the decade-long investment result worked out exceptionally well, with an annualized rate of return of 34.60%. This would have turned a $10K investment made 10 years ago into $195,186.87 today (as of 10/01/2020). On a total return basis, that’s a result of 1,851.21% (something to think about: how might ADBE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“Value investing means really asking what are the best values, and not assuming that because something looks expensive that it is, or assuming that because a stock is down in price and trades at low multiples that it is a bargain.” — Bill Miller
