“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 two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Zebra Technologies Corp. (NASD: ZBRA) back in 2003: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 05/30/2003 |
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| End date: | 05/26/2023 | ||||
| Start price/share: | $32.43 | ||||
| End price/share: | $264.72 | ||||
| Starting shares: | 308.36 | ||||
| Ending shares: | 308.36 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 716.28% | ||||
| Average annual return: | 11.07% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $81,669.59 | ||||
The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 11.07%. This would have turned a $10K investment made 20 years ago into $81,669.59 today (as of 05/26/2023). On a total return basis, that’s a result of 716.28% (something to think about: how might ZBRA shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell
