“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 Intuitive Surgical Inc (NASD: ISRG) back in 2001, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 02/05/2001 |
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| End date: | 02/04/2021 | ||||
| Start price/share: | $2.79 | ||||
| End price/share: | $757.05 | ||||
| Starting shares: | 3,584.23 | ||||
| Ending shares: | 3,584.23 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 27,034.41% | ||||
| Average annual return: | 32.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $2,715,455.73 | ||||
As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 32.32%. This would have turned a $10K investment made 20 years ago into $2,715,455.73 today (as of 02/04/2021). On a total return basis, that’s a result of 27,034.41% (something to think about: how might ISRG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett
