Sunday, February 20, 2011

Example of a successful long term investment


Not all my investments turn out like Vermillion, but it shows the power of long term buy and hold.
I bought Vermillion in 1998 and held it until recently when the stock price of $47.00 became too heady for me. I should have held on, but then… pigs do get slaughtered. Here is the chart over the time I held the shares:

Now this does not include dividends. The table below shows you the detailed investment transactions involved. Very simple, I bought shares twice in 1998, I took profits to recover most of the original profits in 2002, when prices had shot up too much and I got worried about a downturn. The chart shows a significant correction later that year. But really, over the long term it was not a brilliant move unless I had had the courage to buy during that downturn, which I didn't.
In July 2008, I did have the courage and increased my shareholdings and dividend payments by nearly 50%; I bought twice. Total investment (proportionally adjusted from the real amount invested) was $3549.41. Note that the sales proceeds were 'only' $6617.99 plus the earlier sales proceeds of $1216.38 for a total appreciation of 4284.95 or 121% over the amount invested. Dividends were a whopping $2165.43 or 61% of the invested amount. Average Annual Return was 18.31%

Certainly a beautiful flower in my investment garden!

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