“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 twenty year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Synopsys Inc (NASD: SNPS) back in 2003: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 10/13/2003 |
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| End date: | 10/11/2023 | ||||
| Start price/share: | $28.19 | ||||
| End price/share: | $494.95 | ||||
| Starting shares: | 354.74 | ||||
| Ending shares: | 354.74 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,655.76% | ||||
| Average annual return: | 15.40% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $175,641.63 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 15.40%. This would have turned a $10K investment made 20 years ago into $175,641.63 today (as of 10/11/2023). On a total return basis, that’s a result of 1,655.76% (something to think about: how might SNPS 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:
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” — Warren Buffett
