“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 Akamai Technologies Inc (NASD: AKAM), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 07/16/2004 |
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| End date: | 07/15/2024 | ||||
| Start price/share: | $14.64 | ||||
| End price/share: | $96.26 | ||||
| Starting shares: | 683.06 | ||||
| Ending shares: | 683.06 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 557.51% | ||||
| Average annual return: | 9.87% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $65,770.40 | ||||
As we can see, the two-decade investment result worked out well, with an annualized rate of return of 9.87%. This would have turned a $10K investment made 20 years ago into $65,770.40 today (as of 07/15/2024). On a total return basis, that’s a result of 557.51% (something to think about: how might AKAM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Every once in a while, the market does something so stupid it takes your breath away.” — Jim Cramer
