“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 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 Synopsys Inc (NASD: SNPS), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 08/30/2002 |
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| End date: | 08/29/2022 | ||||
| Start price/share: | $21.58 | ||||
| End price/share: | $347.49 | ||||
| Starting shares: | 463.39 | ||||
| Ending shares: | 463.39 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,510.24% | ||||
| Average annual return: | 14.90% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $161,087.42 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 14.90%. This would have turned a $10K investment made 20 years ago into $161,087.42 today (as of 08/29/2022). On a total return basis, that’s a result of 1,510.24% (something to think about: how might SNPS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham
