“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 Red Hat Inc (NYSE: RHT), by taking a look at the investment outcome over a five year holding period.
|Average annual return:||30.22%|
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 30.22%. This would have turned a $10K investment made 5 years ago into $37,444.54 today (as of 04/30/2019). On a total return basis, that’s a result of 274.42% (something to think about: how might RHT 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:
“When I was young I thought that money was the most important thing in life; now that I am old I know that it is.” — Oscar Wilde