“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year period?
Today, let’s look backwards in time to 2012, and take a look at what happened to investors who asked that very question about United Airlines Holdings Inc (NASD: UAL), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 03/05/2012 |
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| End date: | 03/02/2022 | ||||
| Start price/share: | $20.47 | ||||
| End price/share: | $42.42 | ||||
| Starting shares: | 488.52 | ||||
| Ending shares: | 488.52 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 107.23% | ||||
| Average annual return: | 7.56% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,721.50 | ||||
As we can see, the ten year investment result worked out well, with an annualized rate of return of 7.56%. This would have turned a $10K investment made 10 years ago into $20,721.50 today (as of 03/02/2022). On a total return basis, that’s a result of 107.23% (something to think about: how might UAL shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“Taking risks is really the only way to consistently achieve above-average returns.” — Sam Zell
