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“I buy on the assumption that they could close the market the next day and not reopen it for five 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 five 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 Waters Corp. (NYSE: WAT), by taking a look at the investment outcome over a five year holding period.

Start date: 03/20/2014
$10,000

03/20/2014
$21,915

03/19/2019
End date: 03/19/2019
Start price/share: $112.49
End price/share: $246.54
Starting shares: 88.90
Ending shares: 88.90
Dividends reinvested/share: $0.00
Total return: 119.17%
Average annual return: 16.99%
Starting investment: $10,000.00
Ending investment: $21,915.11

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 16.99%. This would have turned a $10K investment made 5 years ago into $21,915.11 today (as of 03/19/2019). On a total return basis, that’s a result of 119.17% (something to think about: how might WAT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“The function of economic forecasting is to make astrology look respectable.” — John Galbraith