“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Waters Corp. (NYSE: WAT) back in 2013: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full ten year investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.
| Start date: | 02/27/2013 |
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| End date: | 02/24/2023 | ||||
| Start price/share: | $92.98 | ||||
| End price/share: | $314.05 | ||||
| Starting shares: | 107.55 | ||||
| Ending shares: | 107.55 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 237.76% | ||||
| Average annual return: | 12.95% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $33,784.50 | ||||
As we can see, the ten year investment result worked out quite well, with an annualized rate of return of 12.95%. This would have turned a $10K investment made 10 years ago into $33,784.50 today (as of 02/24/2023). On a total return basis, that’s a result of 237.76% (something to think about: how might WAT 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:
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.” — Seth Klarman
