“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
Such a great quote from Warren Buffett, highlighting the importance of investment time horizon when considering making an investment. In the short run, who knows what the stock market will do? A week or two after buying any given stock, could the entire stock market fall out of bed? Quite possibly! Should that happen, how would you react? It is an excellent question to think about before hitting the buy button.
For investors who take a multi-year time horizon, the important thing is not what happens in the next week or two, but what the result will be over the long haul. Today, we look at the result investors of the year 2011 experienced, who considered an investment in shares of Netflix Inc (NASD: NFLX) and decided upon a ten year investment time horizon.
|Average annual return:||31.18%|
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 31.18%. This would have turned a $10K investment made 10 years ago into $151,120.06 today (as of 03/30/2021). On a total return basis, that’s a result of 1,411.30% (something to think about: how might NFLX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch