“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 twenty year holding period for an investor who was considering Waters Corp. (NYSE: WAT) back in 2001, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 12/31/2001 |
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| End date: | 12/30/2021 | ||||
| Start price/share: | $38.75 | ||||
| End price/share: | $372.01 | ||||
| Starting shares: | 258.06 | ||||
| Ending shares: | 258.06 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 860.03% | ||||
| Average annual return: | 11.97% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $96,066.43 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 11.97%. This would have turned a $10K investment made 20 years ago into $96,066.43 today (as of 12/30/2021). On a total return basis, that’s a result of 860.03% (something to think about: how might WAT shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” — Seth Klarman
