“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Take-Two Interactive Software, Inc. (NASD: TTWO) back in 2004: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 08/27/2004 |
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| End date: | 08/26/2024 | ||||
| Start price/share: | $22.23 | ||||
| End price/share: | $160.38 | ||||
| Starting shares: | 449.84 | ||||
| Ending shares: | 449.87 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 621.50% | ||||
| Average annual return: | 10.38% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $72,156.89 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 10.38%. This would have turned a $10K investment made 20 years ago into $72,156.89 today (as of 08/26/2024). On a total return basis, that’s a result of 621.50% (something to think about: how might TTWO shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“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
