“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 Adobe Inc (NASD: ADBE) back in 2010, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 11/02/2010 |
|
|||
| End date: | 10/30/2020 | ||||
| Start price/share: | $29.02 | ||||
| End price/share: | $447.10 | ||||
| Starting shares: | 344.59 | ||||
| Ending shares: | 344.59 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,440.66% | ||||
| Average annual return: | 31.45% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $154,030.21 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 31.45%. This would have turned a $10K investment made 10 years ago into $154,030.21 today (as of 10/30/2020). On a total return basis, that’s a result of 1,440.66% (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:
“The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.” — Bruce Kovner
