“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 2004, and take a look at what happened to investors who asked that very question about F5 Inc (NASD: FFIV), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 07/12/2004 |
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| End date: | 07/10/2024 | ||||
| Start price/share: | $11.43 | ||||
| End price/share: | $173.01 | ||||
| Starting shares: | 874.89 | ||||
| Ending shares: | 874.89 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,413.65% | ||||
| Average annual return: | 14.55% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $151,490.98 | ||||
The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 14.55%. This would have turned a $10K investment made 20 years ago into $151,490.98 today (as of 07/10/2024). On a total return basis, that’s a result of 1,413.65% (something to think about: how might FFIV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt
