“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 two-decade period?
Today, let’s look backwards in time to 1999, and take a look at what happened to investors who asked that very question about Celgene Corp (NASD: CELG), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 10/01/1999 |
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| End date: | 09/30/2019 | ||||
| Start price/share: | $1.12 | ||||
| End price/share: | $99.30 | ||||
| Starting shares: | 8,928.57 | ||||
| Ending shares: | 8,928.57 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 8,766.07% | ||||
| Average annual return: | 25.12% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $886,341.96 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 25.12%. This would have turned a $10K investment made 20 years ago into $886,341.96 today (as of 09/30/2019). On a total return basis, that’s a result of 8,766.07% (something to think about: how might CELG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch
