“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 |
|
|||
| 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
