“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 CBRE Group Inc (NYSE: CBRE), by taking a look at the investment outcome over a five year holding period.
Start date: | 07/29/2014 |
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End date: | 07/26/2019 | ||||
Start price/share: | $32.51 | ||||
End price/share: | $52.88 | ||||
Starting shares: | 307.60 | ||||
Ending shares: | 307.60 | ||||
Dividends reinvested/share: | $0.00 | ||||
Total return: | 62.66% | ||||
Average annual return: | 10.23% | ||||
Starting investment: | $10,000.00 | ||||
Ending investment: | $16,265.49 |
The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 10.23%. This would have turned a $10K investment made 5 years ago into $16,265.49 today (as of 07/26/2019). On a total return basis, that’s a result of 62.66% (something to think about: how might CBRE 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:
“Never test the depth of a river with both feet.” — Warren Buffett