Warren Buffett, the legendary former CEO of Berkshire Hathaway, is renowned for his long-term investment strategy. He focused on buying well-run businesses when they were attractively priced and holding them for years, allowing him to benefit from their growth. This approach has yielded impressive returns, as demonstrated by his investments in American Express and Coca-Cola.
Buffett began buying Coca-Cola in 1988 and continued into 1989. A $1,000 investment at the start of 1989 would be worth roughly $18,000 today, a 1,700% return. With dividend reinvestment, that investment would grow to an astonishing $43,000, a 4,200% return. Similarly, a $1,000 investment in American Express at the start of 1995 would be worth about $35,640 today, excluding dividends, and $54,560 with dividends reinvested.
More recent investments, such as Bank of America and Chevron, show mixed results. A $1,000 investment in Bank of America at the start of 2018 would be worth $1,816, an 81% return excluding dividends, and $2,220 with dividends reinvested. Chevron, bought in 2021, has seen a 150% return in a short period, aided by rising oil prices, and $3,185 with dividend reinvestment.
The key takeaway is that Buffett's buy-and-hold strategy can be highly profitable. While some investments may lag in the short term, long-term holding of quality businesses can yield significant returns. However, it's important to note that not all investments perform equally, and some luck is involved, as seen with Chevron's gains from geopolitical conflicts.