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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 decade-long holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Take-Two Interactive Software, Inc. (NASD: TTWO) 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: 10/11/2012


End date: 10/10/2022
Start price/share: $10.97
End price/share: $117.93
Starting shares: 911.58
Ending shares: 911.58
Dividends reinvested/share: $0.00
Total return: 975.02%
Average annual return: 26.80%
Starting investment: $10,000.00
Ending investment: $107,516.48

As we can see, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 26.80%. This would have turned a $10K investment made 10 years ago into $107,516.48 today (as of 10/10/2022). On a total return basis, that’s a result of 975.02% (something to think about: how might TTWO shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” — George Soros