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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 Akamai Technologies Inc (NASD: AKAM) 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: 09/16/2013
$10,000

09/16/2013
$20,533

09/14/2023
End date: 09/14/2023
Start price/share: $51.37
End price/share: $105.52
Starting shares: 194.67
Ending shares: 194.67
Dividends reinvested/share: $0.00
Total return: 105.41%
Average annual return: 7.46%
Starting investment: $10,000.00
Ending investment: $20,533.75

The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 7.46%. This would have turned a $10K investment made 10 years ago into $20,533.75 today (as of 09/14/2023). On a total return basis, that’s a result of 105.41% (something to think about: how might AKAM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard.” — Warren Buffett