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“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 ten year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Chipotle Mexican Grill Inc (NYSE: CMG) 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: 09/24/2012


End date: 09/22/2022
Start price/share: $333.02
End price/share: $1,588.48
Starting shares: 30.03
Ending shares: 30.03
Dividends reinvested/share: $0.00
Total return: 376.99%
Average annual return: 16.91%
Starting investment: $10,000.00
Ending investment: $47,699.81

The above analysis shows the ten year investment result worked out exceptionally well, with an annualized rate of return of 16.91%. This would have turned a $10K investment made 10 years ago into $47,699.81 today (as of 09/22/2022). On a total return basis, that’s a result of 376.99% (something to think about: how might CMG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch