“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Trimble Inc (NASD: TRMB) back in 2003: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
|Average annual return:||16.55%|
As shown above, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 16.55%. This would have turned a $10K investment made 20 years ago into $214,276.46 today (as of 01/05/2023). On a total return basis, that’s a result of 2,041.88% (something to think about: how might TRMB 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:
“Generally, the greater the stigma or revulsion, the better the bargain.” — Seth Klarman