“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A critical pearl of wisdom from Warren Buffett teaches us that with any potential stock investment we may make, as soon as our buy order is filled we will have a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).
The reality of this choice forces us to challenge our confidence in any given company we might invest into, and keep our eyes on the long-term time horizon. The market may go up and down the interim, but over a decade-long holding period, will the investment succeed?
Back in 2013, investors may have been asking themselves that very question about Illumina Inc (NASD: ILMN). Let’s examine what would have happened over a decade-long holding period, had you invested in ILMN shares back in 2013 and held on.
|Average annual return:||6.36%|
As shown above, the decade-long investment result worked out well, with an annualized rate of return of 6.36%. This would have turned a $10K investment made 10 years ago into $18,529.20 today (as of 09/11/2023). On a total return basis, that’s a result of 85.28% (something to think about: how might ILMN shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“Twenty years in this business convinces me that any normal person using the customary three percent of the brain can pick stocks just as well, if not better, than the average Wall Street expert.” — Peter Lynch