“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a ten year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Carmax Inc. (NYSE: KMX) back in 2012, holding through to today.
| Start date: | 05/03/2012 |
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| End date: | 05/02/2022 | ||||
| Start price/share: | $30.43 | ||||
| End price/share: | $91.14 | ||||
| Starting shares: | 328.62 | ||||
| Ending shares: | 328.62 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 199.51% | ||||
| Average annual return: | 11.59% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $29,949.06 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 11.59%. This would have turned a $10K investment made 10 years ago into $29,949.06 today (as of 05/02/2022). On a total return basis, that’s a result of 199.51% (something to think about: how might KMX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
