“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a two-decade period?
Today, let’s look backwards in time to 2003, and take a look at what happened to investors who asked that very question about F5 Inc (NASD: FFIV), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 04/14/2003 |
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| End date: | 04/13/2023 | ||||
| Start price/share: | $6.86 | ||||
| End price/share: | $147.41 | ||||
| Starting shares: | 1,457.73 | ||||
| Ending shares: | 1,457.73 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 2,048.83% | ||||
| Average annual return: | 16.57% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $215,013.46 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 16.57%. This would have turned a $10K investment made 20 years ago into $215,013.46 today (as of 04/13/2023). On a total return basis, that’s a result of 2,048.83% (something to think about: how might FFIV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch
