“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a five year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in NVR Inc. (NYSE: NVR) back in 2014, holding through to today.
| Start date: | 11/25/2014 |
|
|||
| End date: | 11/22/2019 | ||||
| Start price/share: | $1,243.99 | ||||
| End price/share: | $3,689.54 | ||||
| Starting shares: | 8.04 | ||||
| Ending shares: | 8.04 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 196.59% | ||||
| Average annual return: | 24.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $29,661.08 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 24.32%. This would have turned a $10K investment made 5 years ago into $29,661.08 today (as of 11/22/2019). On a total return basis, that’s a result of 196.59% (something to think about: how might NVR 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:
“I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.” — Jesse Livermore
