“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 twenty year 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 DaVita Inc (NYSE: DVA), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 12/06/2004 |
|
|||
| End date: | 12/05/2024 | ||||
| Start price/share: | $18.41 | ||||
| End price/share: | $161.37 | ||||
| Starting shares: | 543.18 | ||||
| Ending shares: | 543.18 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 776.53% | ||||
| Average annual return: | 11.46% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $87,679.31 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 11.46%. This would have turned a $10K investment made 20 years ago into $87,679.31 today (as of 12/05/2024). On a total return basis, that’s a result of 776.53% (something to think about: how might DVA 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:
“As time goes on, I get more and more convinced that the right method of investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.” — John Maynard Keynes
