“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Monster Beverage Corp (NASD: MNST) back in 2004: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 03/11/2004 |
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| End date: | 03/08/2024 | ||||
| Start price/share: | $1.09 | ||||
| End price/share: | $59.18 | ||||
| Starting shares: | 9,174.31 | ||||
| Ending shares: | 9,174.31 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 5,329.36% | ||||
| Average annual return: | 22.10% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $542,985.75 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 22.10%. This would have turned a $10K investment made 20 years ago into $542,985.75 today (as of 03/08/2024). On a total return basis, that’s a result of 5,329.36% (something to think about: how might MNST shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“In trading you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep money.” — Ray Dalio
