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“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 Incyte Corporation (NASD: INCY) 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.

Start date: 03/10/2003


End date: 03/09/2023
Start price/share: $3.00
End price/share: $72.86
Starting shares: 3,333.33
Ending shares: 3,333.33
Dividends reinvested/share: $0.00
Total return: 2,328.67%
Average annual return: 17.28%
Starting investment: $10,000.00
Ending investment: $242,793.90

The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 17.28%. This would have turned a $10K investment made 20 years ago into $242,793.90 today (as of 03/09/2023). On a total return basis, that’s a result of 2,328.67% (something to think about: how might INCY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett