Photo credit:

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a decade-long holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Mohawk Industries, Inc. (NYSE: MHK) back in 2012. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 06/04/2012


End date: 06/02/2022
Start price/share: $62.93
End price/share: $140.16
Starting shares: 158.91
Ending shares: 158.91
Dividends reinvested/share: $0.00
Total return: 122.72%
Average annual return: 8.34%
Starting investment: $10,000.00
Ending investment: $22,278.62

As we can see, the decade-long investment result worked out well, with an annualized rate of return of 8.34%. This would have turned a $10K investment made 10 years ago into $22,278.62 today (as of 06/02/2022). On a total return basis, that’s a result of 122.72% (something to think about: how might MHK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“Successful investing is anticipating the anticipations of others.” — John Maynard Keynes