“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 twenty year period?
Today, let’s look backwards in time to 2002, and take a look at what happened to investors who asked that very question about Penn National Gaming Inc (NASD: PENN), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 05/02/2002 |
|
|||
| End date: | 04/29/2022 | ||||
| Start price/share: | $2.32 | ||||
| End price/share: | $36.57 | ||||
| Starting shares: | 4,310.34 | ||||
| Ending shares: | 4,310.34 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,476.29% | ||||
| Average annual return: | 14.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $157,634.92 | ||||
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 14.78%. This would have turned a $10K investment made 20 years ago into $157,634.92 today (as of 04/29/2022). On a total return basis, that’s a result of 1,476.29% (something to think about: how might PENN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.” — Benjamin Graham
