“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?
Today, let’s look backwards in time to 2014, and take a look at what happened to investors who asked that very question about F5 Inc (NASD: FFIV), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 02/05/2014 |
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| End date: | 02/02/2024 | ||||
| Start price/share: | $103.95 | ||||
| End price/share: | $185.23 | ||||
| Starting shares: | 96.20 | ||||
| Ending shares: | 96.20 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 78.19% | ||||
| Average annual return: | 5.95% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,821.36 | ||||
The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 5.95%. This would have turned a $10K investment made 10 years ago into $17,821.36 today (as of 02/02/2024). On a total return basis, that’s a result of 78.19% (something to think about: how might FFIV 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:
“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently.” — Jack Bogle
