“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Discovery Inc (NASD: DISCA)? Today, we examine the outcome of a five year investment into the stock back in 2014.
| Start date: | 05/27/2014 |
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| End date: | 05/23/2019 | ||||
| Start price/share: | $40.11 | ||||
| End price/share: | $27.24 | ||||
| Starting shares: | 249.31 | ||||
| Ending shares: | 249.31 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | -32.09% | ||||
| Average annual return: | -7.46% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $6,790.85 | ||||
As shown above, the five year investment result worked out poorly, with an annualized rate of return of -7.46%. This would have turned a $10K investment made 5 years ago into $6,790.85 today (as of 05/23/2019). On a total return basis, that’s a result of -32.09% (something to think about: how might DISCA 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:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch
