“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a two-decade holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 20 years to 2004, investors considering an investment into shares of Align Technology Inc (NASD: ALGN) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.
| Start date: | 08/20/2004 |
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| End date: | 08/19/2024 | ||||
| Start price/share: | $14.90 | ||||
| End price/share: | $240.01 | ||||
| Starting shares: | 671.14 | ||||
| Ending shares: | 671.14 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,510.81% | ||||
| Average annual return: | 14.90% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $161,087.42 | ||||
As we can see, the two-decade investment result worked out quite well, with an annualized rate of return of 14.90%. This would have turned a $10K investment made 20 years ago into $161,087.42 today (as of 08/19/2024). On a total return basis, that’s a result of 1,510.81% (something to think about: how might ALGN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. The second is that you’re generally better off sticking with what you know. And the third is that sometimes your best investments are the ones you don’t make.” — Donald Trump
