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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

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a five year holding period for an investor who was considering Carmax Inc. (NYSE: KMX) back in 2014, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 06/13/2014
$10,000

06/13/2014
$18,563

06/12/2019
End date: 06/12/2019
Start price/share: $44.19
End price/share: $82.04
Starting shares: 226.30
Ending shares: 226.30
Dividends reinvested/share: $0.00
Total return: 85.65%
Average annual return: 13.17%
Starting investment: $10,000.00
Ending investment: $18,563.36

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 13.17%. This would have turned a $10K investment made 5 years ago into $18,563.36 today (as of 06/12/2019). On a total return basis, that’s a result of 85.65% (something to think about: how might KMX 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:
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.” — Warren Buffett