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“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 two-decade holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into O’Reilly Automotive, Inc. (NASD: ORLY) back in 2001: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 01/11/2001


End date: 01/08/2021
Start price/share: $12.56
End price/share: $477.92
Starting shares: 796.18
Ending shares: 796.18
Dividends reinvested/share: $0.00
Total return: 3,705.10%
Average annual return: 19.95%
Starting investment: $10,000.00
Ending investment: $380,572.96

As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 19.95%. This would have turned a $10K investment made 20 years ago into $380,572.96 today (as of 01/08/2021). On a total return basis, that’s a result of 3,705.10% (something to think about: how might ORLY 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:
“To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” — Benjamin Graham