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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

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2014, investors considering an investment into shares of O’Reilly Automotive, Inc. (NASD: ORLY) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.

Start date: 06/25/2014
$10,000

06/25/2014
$25,164

06/24/2019
End date: 06/24/2019
Start price/share: $149.24
End price/share: $375.49
Starting shares: 67.01
Ending shares: 67.01
Dividends reinvested/share: $0.00
Total return: 151.60%
Average annual return: 20.27%
Starting investment: $10,000.00
Ending investment: $25,164.40

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 20.27%. This would have turned a $10K investment made 5 years ago into $25,164.40 today (as of 06/24/2019). On a total return basis, that’s a result of 151.60% (something to think about: how might ORLY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“I made my money by selling too soon.” — Bernard Baruch