Photo credit:

“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 Vertex Pharmaceuticals, Inc. (NASD: VRTX), by taking a look at the investment outcome over a twenty year holding period.

Start date: 04/19/2001


End date: 04/16/2021
Start price/share: $44.70
End price/share: $219.39
Starting shares: 223.71
Ending shares: 223.71
Dividends reinvested/share: $0.00
Total return: 390.81%
Average annual return: 8.28%
Starting investment: $10,000.00
Ending investment: $49,108.23

As we can see, the twenty year investment result worked out well, with an annualized rate of return of 8.28%. This would have turned a $10K investment made 20 years ago into $49,108.23 today (as of 04/16/2021). On a total return basis, that’s a result of 390.81% (something to think about: how might VRTX shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“If you’re looking for a home run, a great investment for five years or 10 years or more, then the only way to beat this enormous fog that covers the future is to identify a long-term trend that will give a particular business some sort of edge.” — Ralph Wanger