“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 decade-long period?
Today, let’s look backwards in time to 2010, and take a look at what happened to investors who asked that very question about Berkshire Hathaway Inc New (NYSE: BRK.B), by taking a look at the investment outcome over a decade-long holding period.
| Start date: | 01/04/2010 |
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| End date: | 01/02/2020 | ||||
| Start price/share: | $66.22 | ||||
| End price/share: | $228.39 | ||||
| Starting shares: | 151.01 | ||||
| Ending shares: | 151.01 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 244.90% | ||||
| Average annual return: | 13.18% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $34,490.29 | ||||
As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 13.18%. This would have turned a $10K investment made 10 years ago into $34,490.29 today (as of 01/02/2020). On a total return basis, that’s a result of 244.90% (something to think about: how might BRK.B shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.” — Seth Klarman
