“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
A central lesson from Warren Buffett’s approach to investing is the importance of framing any potential stock purchase within a genuinely long-term time horizon. Every investor faces the same basic choice: focus on the market’s short-term volatility, or identify businesses that can compound value over many years and then hold them with patience and discipline.
That kind of discipline often means being willing to hold a position for 10, 15, or even 20 years. It may also mean, as Buffett has suggested, acting as if the stock market could close for years at a time — and still being comfortable owning the underlying business. Long-term wealth creation comes not just from stock selection, but from letting the power of compounding work uninterrupted.
With that framework in mind, consider CoStar Group, Inc. (NASD: CSGP), a leading provider of commercial real estate information, analytics, and online marketplaces. CoStar has built an extensive proprietary database on commercial properties, tenants, and lease terms, and has complemented its data and analytics business with online platforms such as LoopNet, Apartments.com, and other digital marketplaces. Its business model is primarily subscription-based and asset-light, characteristics often associated with durable, recurring cash flows.
Today, we examine what would have happened over a twenty-year holding period had you decided back in 2006 to buy shares of CoStar Group and simply hold through to today, without trading in and out along the way.
| Start date: | 03/20/2006 |
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| End date: | 03/17/2026 | ||||
| Start price/share: | $5.00 | ||||
| End price/share: | $44.25 | ||||
| Starting shares: | 2,000.00 | ||||
| Ending shares: | 2,000.00 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 785.00% | ||||
| Average annual return: | 11.52% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $88,549.26 | ||||
As shown above, over this twenty-year period the investment outcome was very strong, with an annualized rate of return of 11.52%. That would have turned a $10,000 investment made 20 years ago into $88,549.26 today (as of 03/17/2026). On a total return basis, that is a gain of 785.00%, and notably it was achieved without any contribution from dividends, as CoStar has historically focused on reinvesting cash flows back into the business rather than paying a cash dividend.
Put in context, an 11.52% annualized return over two decades meaningfully exceeds the long-run historical nominal return of the U.S. equity market, which many analysts place in the high single digits. It also spans a period that included the 2008–2009 global financial crisis, the European sovereign debt crisis, a prolonged period of low interest rates, the COVID-19 pandemic shock, and subsequent tightening cycles — an environment that tested the resilience of many business models.
The path, of course, would not have been smooth. CoStar shares, like most growth-oriented technology and data stocks, have experienced periods of significant volatility and drawdowns as investor sentiment around commercial real estate, interest rates, and digital advertising has shifted. However, the 20-year outcome suggests that the company’s underlying earnings power, competitive positioning in commercial real estate data and marketplaces, and continued investment in product development were ultimately recognized in its share price over time.
For long-term investors, several themes emerge from CoStar’s experience over this horizon:
- Compounding over decades can be powerful even at what may appear to be “moderate” annual rates of return. An 11–12% annualized return for 20 years produces nearly a ninefold increase in capital.
- Reinvestment can substitute for dividends in a total-return framework. CoStar did not pay a dividend over this period, yet long-term shareholders were rewarded as retained earnings funded acquisitions, platform expansion, and data enhancement.
- Business quality and competitive advantages matter. CoStar has benefited from network effects and high switching costs associated with its data platforms, characteristics that can support pricing power and customer retention.
- A long holding period can allow investors to look through cyclical downturns and sector headwinds, provided the underlying business continues to execute and grow.
None of this guarantees that CoStar will deliver comparable results over the next twenty years; business conditions, valuation starting points, regulatory environments, and competitive dynamics can all change. Nonetheless, the retrospective illustrates the kind of long-duration wealth creation that can occur when investors identify scalable, asset-light businesses with recurring revenue characteristics and hold them through multiple economic cycles.
As always, past performance is not a guarantee of future results, and individual circumstances, risk tolerance, and portfolio objectives should guide any investment decision. Still, for investors thinking in truly long-term terms, CoStar’s record over this period provides a concrete example of how a disciplined buy-and-hold approach in a growing, competitively advantaged company can reward patience.
One more piece of investment wisdom to leave you with:
“The policy of being too cautious is the greatest risk of all.” — Jawaharlal Nehru
