“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year period?
Today, let’s look backwards in time to 2011, and take a look at what happened to investors who asked that very question about Copart Inc (NASD: CPRT), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 03/18/2011 |
|
|||
| End date: | 03/17/2021 | ||||
| Start price/share: | $10.23 | ||||
| End price/share: | $110.53 | ||||
| Starting shares: | 977.52 | ||||
| Ending shares: | 977.52 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 980.45% | ||||
| Average annual return: | 26.85% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $108,011.67 | ||||
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 26.85%. This would have turned a $10K investment made 10 years ago into $108,011.67 today (as of 03/17/2021). On a total return basis, that’s a result of 980.45% (something to think about: how might CPRT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes.” — Warren Buffett
