“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A key lesson we can learn from Warren Buffett, is about how to think about a potential stock investment in the context of a long-term time horizon. Every investor in a stock has a choice: bite our fingernails over the short-term ups and downs that are inevitable with the stock market, or, zero in on stocks we are comfortable to simply buy and hold for the long haul — maybe even a decade-long holding period. Heck, investors can even choose to completely ignore the stock market’s short-run quotations and instead go into their initial investment planning to hold on for years and years regardless of the fluctuations in price that might occur next.
Today, we examine what would have happened over a decade-long holding period, had you decided back in 2011 to buy shares of Boston Scientific Corp. (NYSE: BSX) and simply hold through to today.
| Start date: | 08/08/2011 |
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| End date: | 08/05/2021 | ||||
| Start price/share: | $6.00 | ||||
| End price/share: | $44.65 | ||||
| Starting shares: | 1,666.67 | ||||
| Ending shares: | 1,666.67 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 644.17% | ||||
| Average annual return: | 22.23% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $74,435.16 | ||||
As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 22.23%. This would have turned a $10K investment made 10 years ago into $74,435.16 today (as of 08/05/2021). On a total return basis, that’s a result of 644.17% (something to think about: how might BSX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Value investing is at its core the marriage of a contrarian streak and a calculator.” — Seth Klarman
