“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 Align Technology Inc (NASD: ALGN), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 07/19/2002 |
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| End date: | 07/18/2022 | ||||
| Start price/share: | $2.27 | ||||
| End price/share: | $254.08 | ||||
| Starting shares: | 4,405.29 | ||||
| Ending shares: | 4,405.29 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 11,092.95% | ||||
| Average annual return: | 26.59% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $1,119,721.93 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 26.59%. This would have turned a $10K investment made 20 years ago into $1,119,721.93 today (as of 07/18/2022). On a total return basis, that’s a result of 11,092.95% (something to think about: how might ALGN 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:
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” — Albert Einstein
