“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a twenty year holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 20 years to 1999, investors considering an investment into shares of Take-Two Interactive Software, Inc. (NASD: TTWO) may have been pondering this very question and thinking about their potential investment result over a full twenty year time horizon. Here’s how that would have worked out.
| Start date: | 05/17/1999 |
|
|||
| End date: | 05/15/2019 | ||||
| Start price/share: | $5.17 | ||||
| End price/share: | $107.48 | ||||
| Starting shares: | 1,934.24 | ||||
| Ending shares: | 1,934.36 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,979.04% | ||||
| Average annual return: | 16.38% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $208,021.64 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 16.38%. This would have turned a $10K investment made 20 years ago into $208,021.64 today (as of 05/15/2019). On a total return basis, that’s a result of 1,979.04% (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.]
One more investment quote to leave you with:
“There is nothing riskier than the widespread perception that there is no risk.” — Howard Marks
