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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

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 decade-long holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Cadence Design Systems Inc (NASD: CDNS) back in 2014: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full decade-long investment time horizon and then actually held for these past 10 years, here’s how that investment would have turned out.

Start date: 01/22/2014


End date: 01/19/2024
Start price/share: $14.30
End price/share: $292.14
Starting shares: 699.30
Ending shares: 699.30
Dividends reinvested/share: $0.00
Total return: 1,942.94%
Average annual return: 35.23%
Starting investment: $10,000.00
Ending investment: $204,348.46

As shown above, the decade-long investment result worked out exceptionally well, with an annualized rate of return of 35.23%. This would have turned a $10K investment made 10 years ago into $204,348.46 today (as of 01/19/2024). On a total return basis, that’s a result of 1,942.94% (something to think about: how might CDNS shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“The most important thing about an investment philosophy is that you have one.” — David Booth