“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year holding period for an investor who was considering Incyte Corporation (NASD: INCY) back in 2011, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 11/04/2011 |
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| End date: | 11/03/2021 | ||||
| Start price/share: | $13.32 | ||||
| End price/share: | $66.79 | ||||
| Starting shares: | 750.75 | ||||
| Ending shares: | 750.75 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 401.43% | ||||
| Average annual return: | 17.48% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $50,121.35 | ||||
The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.48%. This would have turned a $10K investment made 10 years ago into $50,121.35 today (as of 11/03/2021). On a total return basis, that’s a result of 401.43% (something to think about: how might INCY shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil
