“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 twenty year period?
Today, let’s look backwards in time to 2000, and take a look at what happened to investors who asked that very question about Waters Corp. (NYSE: WAT), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 12/15/2000 |
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| End date: | 12/14/2020 | ||||
| Start price/share: | $80.06 | ||||
| End price/share: | $240.75 | ||||
| Starting shares: | 124.90 | ||||
| Ending shares: | 124.90 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 200.70% | ||||
| Average annual return: | 5.66% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $30,093.60 | ||||
The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 5.66%. This would have turned a $10K investment made 20 years ago into $30,093.60 today (as of 12/14/2020). On a total return basis, that’s a result of 200.70% (something to think about: how might WAT shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently.” — Jack Bogle
