
“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a twenty year holding period for an investor who was considering Carmax Inc. (NYSE: KMX) back in 2005, bought the stock, ignored the market’s ups and downs, and simply held through to today.
Start date: | 01/31/2005 |
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End date: | 01/30/2025 | ||||
Start price/share: | $14.47 | ||||
End price/share: | $87.59 | ||||
Starting shares: | 691.09 | ||||
Ending shares: | 691.09 | ||||
Dividends reinvested/share: | $0.00 | ||||
Total return: | 505.32% | ||||
Average annual return: | 9.42% | ||||
Starting investment: | $10,000.00 | ||||
Ending investment: | $60,584.66 |
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 9.42%. This would have turned a $10K investment made 20 years ago into $60,584.66 today (as of 01/30/2025). On a total return basis, that’s a result of 505.32% (something to think about: how might KMX shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“An investment in knowledge pays the best interest.” — Benjamin Franklin