“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 Electronic Arts, Inc. (NASD: EA) back in 2000, bought the stock, ignored the market’s ups and downs, and simply held through to today.
|Average annual return:||5.22%|
As we can see, the twenty year investment result worked out well, with an annualized rate of return of 5.22%. This would have turned a $10K investment made 20 years ago into $27,682.68 today (as of 11/23/2020). On a total return basis, that’s a result of 176.95% (something to think about: how might EA 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:
“Those who do not remember the past are condemned to repeat it.” — George Santayana