“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 twenty year 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 Align Technology Inc (NASD: ALGN), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 03/19/2001 |
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| End date: | 03/16/2021 | ||||
| Start price/share: | $8.88 | ||||
| End price/share: | $542.54 | ||||
| Starting shares: | 1,126.76 | ||||
| Ending shares: | 1,126.76 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 6,013.13% | ||||
| Average annual return: | 22.83% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $611,411.65 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 22.83%. This would have turned a $10K investment made 20 years ago into $611,411.65 today (as of 03/16/2021). On a total return basis, that’s a result of 6,013.13% (something to think about: how might ALGN 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:
“In the long run, we are all dead.” — John Maynard Keynes
