“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a ten year holding period for an investor who was considering O’Reilly Automotive, Inc. (NASD: ORLY) back in 2012, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 04/12/2012 |
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| End date: | 04/11/2022 | ||||
| Start price/share: | $94.28 | ||||
| End price/share: | $723.94 | ||||
| Starting shares: | 106.07 | ||||
| Ending shares: | 106.07 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 667.86% | ||||
| Average annual return: | 22.60% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $76,762.15 | ||||
As shown above, the ten year investment result worked out exceptionally well, with an annualized rate of return of 22.60%. This would have turned a $10K investment made 10 years ago into $76,762.15 today (as of 04/11/2022). On a total return basis, that’s a result of 667.86% (something to think about: how might ORLY shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil
