“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a two-decade holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Netflix Inc (NASD: NFLX) back in 2003, holding through to today.
| Start date: | 05/27/2003 |
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| End date: | 05/24/2023 | ||||
| Start price/share: | $1.62 | ||||
| End price/share: | $364.85 | ||||
| Starting shares: | 6,172.84 | ||||
| Ending shares: | 6,172.84 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 22,421.60% | ||||
| Average annual return: | 31.10% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $2,252,673.41 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 31.10%. This would have turned a $10K investment made 20 years ago into $2,252,673.41 today (as of 05/24/2023). On a total return basis, that’s a result of 22,421.60% (something to think about: how might NFLX shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” — Seth Klarman
