“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a two-decade holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 20 years to 2003, investors considering an investment into shares of Take-Two Interactive Software, Inc. (NASD: TTWO) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.
| Start date: | 04/04/2003 |
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| End date: | 04/03/2023 | ||||
| Start price/share: | $14.37 | ||||
| End price/share: | $118.69 | ||||
| Starting shares: | 695.89 | ||||
| Ending shares: | 695.94 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 726.01% | ||||
| Average annual return: | 11.13% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $82,604.36 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 11.13%. This would have turned a $10K investment made 20 years ago into $82,604.36 today (as of 04/03/2023). On a total return basis, that’s a result of 726.01% (something to think about: how might TTWO 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:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” — Benjamin Graham
