“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 Salesforce.com Inc (NYSE: CRM), by taking a look at the investment outcome over a five year holding period.
|Average annual return:||23.79%|
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 23.79%. This would have turned a $10K investment made 5 years ago into $29,034.87 today (as of 07/11/2019). On a total return basis, that’s a result of 190.33% (something to think about: how might CRM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“All intelligent investing is value investing: acquiring more that you are paying for. You must value the business in order to value the stock.” — Charlie Munger