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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into United Continental Holdings Inc (NASD: UAL) back in 2014: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 05/09/2014
$10,000

05/09/2014
$21,075

05/08/2019
End date: 05/08/2019
Start price/share: $40.16
End price/share: $84.64
Starting shares: 249.00
Ending shares: 249.00
Dividends reinvested/share: $0.00
Total return: 110.76%
Average annual return: 16.08%
Starting investment: $10,000.00
Ending investment: $21,075.94

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 16.08%. This would have turned a $10K investment made 5 years ago into $21,075.94 today (as of 05/08/2019). On a total return basis, that’s a result of 110.76% (something to think about: how might UAL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch