“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 AutoZone, Inc. (NYSE: AZO), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 08/27/2004 |
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| End date: | 08/26/2024 | ||||
| Start price/share: | $75.36 | ||||
| End price/share: | $3,157.10 | ||||
| Starting shares: | 132.70 | ||||
| Ending shares: | 132.70 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 4,089.36% | ||||
| Average annual return: | 20.52% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $418,861.82 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 20.52%. This would have turned a $10K investment made 20 years ago into $418,861.82 today (as of 08/26/2024). On a total return basis, that’s a result of 4,089.36% (something to think about: how might AZO 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:
“While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.” — Seth Klarman
