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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Copart Inc (NASD: CPRT) back in 2014: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 10/13/2014


End date: 10/10/2019
Start price/share: $15.13
End price/share: $81.06
Starting shares: 660.94
Ending shares: 660.94
Dividends reinvested/share: $0.00
Total return: 435.76%
Average annual return: 39.94%
Starting investment: $10,000.00
Ending investment: $53,568.52

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 39.94%. This would have turned a $10K investment made 5 years ago into $53,568.52 today (as of 10/10/2019). On a total return basis, that’s a result of 435.76% (something to think about: how might CPRT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch