“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 two-decade 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 Advanced Micro Devices Inc (NASD: AMD), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 05/03/2004 |
|
|||
| End date: | 05/01/2024 | ||||
| Start price/share: | $14.22 | ||||
| End price/share: | $144.27 | ||||
| Starting shares: | 703.23 | ||||
| Ending shares: | 703.23 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 914.56% | ||||
| Average annual return: | 12.28% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $101,498.94 | ||||
The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 12.28%. This would have turned a $10K investment made 20 years ago into $101,498.94 today (as of 05/01/2024). On a total return basis, that’s a result of 914.56% (something to think about: how might AMD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Don’t look for the needle in the haystack, just buy the haystack.” — John Bogle
