“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 two-decade 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 Mohawk Industries, Inc. (NYSE: MHK), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 04/30/2001 |
|
|||
| End date: | 04/27/2021 | ||||
| Start price/share: | $32.66 | ||||
| End price/share: | $208.36 | ||||
| Starting shares: | 306.18 | ||||
| Ending shares: | 306.18 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 537.97% | ||||
| Average annual return: | 9.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $63,847.64 | ||||
As shown above, the two-decade investment result worked out well, with an annualized rate of return of 9.71%. This would have turned a $10K investment made 20 years ago into $63,847.64 today (as of 04/27/2021). On a total return basis, that’s a result of 537.97% (something to think about: how might MHK shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“The best stock to buy is the one you already own.” — Peter Lynch
