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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— 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 two-decade holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Charles River Laboratories International Inc. (NYSE: CRL) back in 2003. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 10/06/2003


End date: 10/03/2023
Start price/share: $31.25
End price/share: $191.68
Starting shares: 320.00
Ending shares: 320.00
Dividends reinvested/share: $0.00
Total return: 513.38%
Average annual return: 9.49%
Starting investment: $10,000.00
Ending investment: $61,334.51

As shown above, the two-decade investment result worked out well, with an annualized rate of return of 9.49%. This would have turned a $10K investment made 20 years ago into $61,334.51 today (as of 10/03/2023). On a total return basis, that’s a result of 513.38% (something to think about: how might CRL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” — Seth Klarman