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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 Verisign Inc (NASD: VRSN) 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: 10/23/2014
$10,000

10/23/2014
$32,239

10/22/2019
End date: 10/22/2019
Start price/share: $56.34
End price/share: $181.61
Starting shares: 177.49
Ending shares: 177.49
Dividends reinvested/share: $0.00
Total return: 222.35%
Average annual return: 26.38%
Starting investment: $10,000.00
Ending investment: $32,239.76

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 26.38%. This would have turned a $10K investment made 5 years ago into $32,239.76 today (as of 10/22/2019). On a total return basis, that’s a result of 222.35% (something to think about: how might VRSN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“The whole secret to winning big in the stock market is not to be right all the time, but to lose the least amount possible when you’re wrong.” — William O’Neil