“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 twenty year period?
Today, let’s look backwards in time to 2004, and take a look at what happened to investors who asked that very question about Amazon.com Inc (NASD: AMZN), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 03/08/2004 |
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| End date: | 03/06/2024 | ||||
| Start price/share: | $2.18 | ||||
| End price/share: | $173.51 | ||||
| Starting shares: | 4,587.16 | ||||
| Ending shares: | 4,587.16 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 7,859.17% | ||||
| Average annual return: | 24.45% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $795,570.73 | ||||
As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 24.45%. This would have turned a $10K investment made 20 years ago into $795,570.73 today (as of 03/06/2024). On a total return basis, that’s a result of 7,859.17% (something to think about: how might AMZN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger
