Photo credit:

“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 Netflix Inc (NASD: NFLX) back in 2014. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 01/02/2014


End date: 12/29/2023
Start price/share: $51.83
End price/share: $486.88
Starting shares: 192.94
Ending shares: 192.94
Dividends reinvested/share: $0.00
Total return: 839.38%
Average annual return: 25.12%
Starting investment: $10,000.00
Ending investment: $93,914.80

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 25.12%. This would have turned a $10K investment made 10 years ago into $93,914.80 today (as of 12/29/2023). On a total return basis, that’s a result of 839.38% (something to think about: how might NFLX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“Those who do not remember the past are condemned to repeat it.” — George Santayana