“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 decade-long 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 Adobe Inc (NASD: ADBE), by taking a look at the investment outcome over a decade-long holding period.
| Start date: | 03/25/2011 |
|
|||
| End date: | 03/24/2021 | ||||
| Start price/share: | $32.64 | ||||
| End price/share: | $451.51 | ||||
| Starting shares: | 306.37 | ||||
| Ending shares: | 306.37 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,283.30% | ||||
| Average annual return: | 30.03% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $138,375.92 | ||||
As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 30.03%. This would have turned a $10K investment made 10 years ago into $138,375.92 today (as of 03/24/2021). On a total return basis, that’s a result of 1,283.30% (something to think about: how might ADBE 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:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil
