“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 Hologic Inc (NASD: HOLX) back in 1999: 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: | 10/15/1999 |
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| End date: | 10/14/2019 | ||||
| Start price/share: | $0.88 | ||||
| End price/share: | $48.50 | ||||
| Starting shares: | 11,363.64 | ||||
| Ending shares: | 11,363.64 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 5,411.36% | ||||
| Average annual return: | 22.18% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $550,751.69 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 22.18%. This would have turned a $10K investment made 20 years ago into $550,751.69 today (as of 10/14/2019). On a total return basis, that’s a result of 5,411.36% (something to think about: how might HOLX 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:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
