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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a ten year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Advanced Micro Devices Inc (NASD: AMD) back in 2013. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 04/26/2013
$10,000

04/26/2013
  $317,340

04/25/2023
End date: 04/25/2023
Start price/share: $2.64
End price/share: $83.80
Starting shares: 3,787.88
Ending shares: 3,787.88
Dividends reinvested/share: $0.00
Total return: 3,074.24%
Average annual return: 41.29%
Starting investment: $10,000.00
Ending investment: $317,340.51

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 41.29%. This would have turned a $10K investment made 10 years ago into $317,340.51 today (as of 04/25/2023). On a total return basis, that’s a result of 3,074.24% (something to think about: how might AMD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“When you sell in desperation, you always sell cheap.” — Peter Lynch