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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— 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 twenty year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Centene Corp (NYSE: CNC) back in 2002. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 12/05/2002


End date: 12/02/2022
Start price/share: $3.75
End price/share: $85.79
Starting shares: 2,666.67
Ending shares: 2,666.67
Dividends reinvested/share: $0.00
Total return: 2,187.73%
Average annual return: 16.94%
Starting investment: $10,000.00
Ending investment: $228,893.89

As shown above, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 16.94%. This would have turned a $10K investment made 20 years ago into $228,893.89 today (as of 12/02/2022). On a total return basis, that’s a result of 2,187.73% (something to think about: how might CNC shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more piece of investment wisdom to leave you with:
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” — Charlie Munger