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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

Such a great quote from Warren Buffett, highlighting the importance of investment time horizon when considering making an investment. In the short run, who knows what the stock market will do? A week or two after buying any given stock, could the entire stock market fall out of bed? Quite possibly! Should that happen, how would you react? It is an excellent question to think about before hitting the buy button.

For investors who take a multi-year time horizon, the important thing is not what happens in the next week or two, but what the result will be over the long haul. Today, we look at the result investors of the year 2014 experienced, who considered an investment in shares of lululemon athletica inc (NASD: LULU) and decided upon a ten year investment time horizon.

Start date: 02/06/2014


End date: 02/05/2024
Start price/share: $45.45
End price/share: $456.73
Starting shares: 220.02
Ending shares: 220.02
Dividends reinvested/share: $0.00
Total return: 904.91%
Average annual return: 25.95%
Starting investment: $10,000.00
Ending investment: $100,520.87

As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 25.95%. This would have turned a $10K investment made 10 years ago into $100,520.87 today (as of 02/05/2024). On a total return basis, that’s a result of 904.91% (something to think about: how might LULU 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:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell