Photo credit:

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a decade-long holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Chipotle Mexican Grill Inc (NYSE: CMG) back in 2011. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 06/13/2011


End date: 06/10/2021
Start price/share: $270.90
End price/share: $1,344.69
Starting shares: 36.91
Ending shares: 36.91
Dividends reinvested/share: $0.00
Total return: 396.38%
Average annual return: 17.38%
Starting investment: $10,000.00
Ending investment: $49,652.49

As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 17.38%. This would have turned a $10K investment made 10 years ago into $49,652.49 today (as of 06/10/2021). On a total return basis, that’s a result of 396.38% (something to think about: how might CMG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“When the public is most frightened, only the strong are left, and that’s when the market is in the best possible hands.” — Victor Niederhoffer