“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A critical pearl of wisdom from Warren Buffett teaches us that with any potential stock investment we may make, as soon as our buy order is filled we will have a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).
The reality of this choice forces us to challenge our confidence in any given company we might invest into, and keep our eyes on the long-term time horizon. The market may go up and down the interim, but over a ten year holding period, will the investment succeed?
Back in 2014, investors may have been asking themselves that very question about Epam Systems, Inc. (NYSE: EPAM). Let’s examine what would have happened over a ten year holding period, had you invested in EPAM shares back in 2014 and held on.
Start date: | 08/27/2014 |
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End date: | 08/26/2024 | ||||
Start price/share: | $40.25 | ||||
End price/share: | $196.13 | ||||
Starting shares: | 248.45 | ||||
Ending shares: | 248.45 | ||||
Dividends reinvested/share: | $0.00 | ||||
Total return: | 387.28% | ||||
Average annual return: | 17.15% | ||||
Starting investment: | $10,000.00 | ||||
Ending investment: | $48,730.36 |
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 17.15%. This would have turned a $10K investment made 10 years ago into $48,730.36 today (as of 08/26/2024). On a total return basis, that’s a result of 387.28% (something to think about: how might EPAM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“It’s not always easy to do what’s not popular, but that’s where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized.” — John Neff