“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 Take-Two Interactive Software, Inc. (NASD: TTWO), by taking a look at the investment outcome over a five year holding period.
| Start date: | 07/28/2014 |
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| End date: | 07/25/2019 | ||||
| Start price/share: | $23.45 | ||||
| End price/share: | $119.25 | ||||
| Starting shares: | 426.44 | ||||
| Ending shares: | 426.44 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 408.53% | ||||
| Average annual return: | 38.49% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $50,853.07 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 38.49%. This would have turned a $10K investment made 5 years ago into $50,853.07 today (as of 07/25/2019). On a total return basis, that’s a result of 408.53% (something to think about: how might TTWO 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:
“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” — Peter Lynch
