“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 two-decade 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 Bio-Rad Laboratories Inc (NYSE: BIO), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 07/22/2002 |
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| End date: | 07/20/2022 | ||||
| Start price/share: | $37.45 | ||||
| End price/share: | $496.04 | ||||
| Starting shares: | 267.02 | ||||
| Ending shares: | 267.02 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,224.54% | ||||
| Average annual return: | 13.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $132,366.90 | ||||
As we can see, the two-decade investment result worked out quite well, with an annualized rate of return of 13.78%. This would have turned a $10K investment made 20 years ago into $132,366.90 today (as of 07/20/2022). On a total return basis, that’s a result of 1,224.54% (something to think about: how might BIO shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger
