“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a two-decade holding period for an investor who was considering Advanced Micro Devices Inc (NASD: AMD) back in 2001, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 04/16/2001 |
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| End date: | 04/13/2021 | ||||
| Start price/share: | $23.50 | ||||
| End price/share: | $80.19 | ||||
| Starting shares: | 425.53 | ||||
| Ending shares: | 425.53 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 241.23% | ||||
| Average annual return: | 6.33% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $34,139.91 | ||||
As shown above, the two-decade investment result worked out well, with an annualized rate of return of 6.33%. This would have turned a $10K investment made 20 years ago into $34,139.91 today (as of 04/13/2021). On a total return basis, that’s a result of 241.23% (something to think about: how might AMD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch
