“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 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 Amazon.com Inc (NASD: AMZN), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 06/18/2001 |
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| End date: | 06/16/2021 | ||||
| Start price/share: | $11.83 | ||||
| End price/share: | $3,415.25 | ||||
| Starting shares: | 845.31 | ||||
| Ending shares: | 845.31 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 28,769.40% | ||||
| Average annual return: | 32.73% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $2,886,639.78 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 32.73%. This would have turned a $10K investment made 20 years ago into $2,886,639.78 today (as of 06/16/2021). On a total return basis, that’s a result of 28,769.40% (something to think about: how might AMZN 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:
“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
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