“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Carmax Inc. (NYSE: KMX)? Today, we examine the outcome of a two-decade investment into the stock back in 2001.
| Start date: | 12/17/2001 |
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| End date: | 12/14/2021 | ||||
| Start price/share: | $11.56 | ||||
| End price/share: | $141.31 | ||||
| Starting shares: | 865.05 | ||||
| Ending shares: | 865.05 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,122.40% | ||||
| Average annual return: | 13.33% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $122,234.99 | ||||
The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 13.33%. This would have turned a $10K investment made 20 years ago into $122,234.99 today (as of 12/14/2021). On a total return basis, that’s a result of 1,122.40% (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.]
Another great investment quote to think about:
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” — George Soros
