“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Biogen Inc (NASD: BIIB) back in 2001: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 01/25/2001 |
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| End date: | 01/22/2021 | ||||
| Start price/share: | $61.77 | ||||
| End price/share: | $269.44 | ||||
| Starting shares: | 161.90 | ||||
| Ending shares: | 161.90 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 336.23% | ||||
| Average annual return: | 7.64% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $43,616.32 | ||||
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 7.64%. This would have turned a $10K investment made 20 years ago into $43,616.32 today (as of 01/22/2021). On a total return basis, that’s a result of 336.23% (something to think about: how might BIIB shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” — Warren Buffett
