“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 twenty year period?
Today, let’s look backwards in time to 2002, and take a look at what happened to investors who asked that very question about Akamai Technologies Inc (NASD: AKAM), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 03/11/2002 |
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| End date: | 03/09/2022 | ||||
| Start price/share: | $4.60 | ||||
| End price/share: | $109.18 | ||||
| Starting shares: | 2,173.91 | ||||
| Ending shares: | 2,173.91 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 2,273.48% | ||||
| Average annual return: | 17.15% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $237,361.82 | ||||
The above analysis shows the twenty year investment result worked out exceptionally well, with an annualized rate of return of 17.15%. This would have turned a $10K investment made 20 years ago into $237,361.82 today (as of 03/09/2022). On a total return basis, that’s a result of 2,273.48% (something to think about: how might AKAM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Money is better than poverty, if only for financial reasons.” — Woody Allen
