“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 ten year period?
Today, let’s look backwards in time to 2014, and take a look at what happened to investors who asked that very question about Deckers Outdoor Corp. (NYSE: DECK), by taking a look at the investment outcome over a ten year holding period.
| Start date: | 08/05/2014 |
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| End date: | 08/02/2024 | ||||
| Start price/share: | $91.71 | ||||
| End price/share: | $865.33 | ||||
| Starting shares: | 109.04 | ||||
| Ending shares: | 109.04 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 843.55% | ||||
| Average annual return: | 25.16% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $94,331.24 | ||||
As we can see, the ten year investment result worked out exceptionally well, with an annualized rate of return of 25.16%. This would have turned a $10K investment made 10 years ago into $94,331.24 today (as of 08/02/2024). On a total return basis, that’s a result of 843.55% (something to think about: how might DECK shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett
