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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 Align Technology Inc (NASD: ALGN) 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: 06/12/2013
$10,000

06/12/2013
  $88,989

06/09/2023
End date: 06/09/2023
Start price/share: $34.22
End price/share: $304.44
Starting shares: 292.23
Ending shares: 292.23
Dividends reinvested/share: $0.00
Total return: 789.66%
Average annual return: 24.44%
Starting investment: $10,000.00
Ending investment: $88,989.72

As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 24.44%. This would have turned a $10K investment made 10 years ago into $88,989.72 today (as of 06/09/2023). On a total return basis, that’s a result of 789.66% (something to think about: how might ALGN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“People who invest make money for themselves; people who speculate make money for their brokers.” — Benjamin Graham