“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 two-decade period?
Today, let’s look backwards in time to 2001, and take a look at what happened to investors who asked that very question about Monster Beverage Corp (NASD: MNST), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 01/25/2001 |
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| End date: | 01/22/2021 | ||||
| Start price/share: | $0.69 | ||||
| End price/share: | $88.20 | ||||
| Starting shares: | 14,492.75 | ||||
| Ending shares: | 14,492.75 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 12,682.61% | ||||
| Average annual return: | 27.44% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $1,278,475.10 | ||||
The above analysis shows the two-decade investment result worked out exceptionally well, with an annualized rate of return of 27.44%. This would have turned a $10K investment made 20 years ago into $1,278,475.10 today (as of 01/22/2021). On a total return basis, that’s a result of 12,682.61% (something to think about: how might MNST 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:
“The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.” — Benjamin Graham
