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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

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Alexion Pharmaceuticals Inc. (NASD: ALXN)? Today, we examine the outcome of a five year investment into the stock back in 2014.

Start date: 11/18/2014
$10,000

11/18/2014
$5,634

11/15/2019
End date: 11/15/2019
Start price/share: $192.37
End price/share: $108.37
Starting shares: 51.98
Ending shares: 51.98
Dividends reinvested/share: $0.00
Total return: -43.67%
Average annual return: -10.85%
Starting investment: $10,000.00
Ending investment: $5,634.82

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -10.85%. This would have turned a $10K investment made 5 years ago into $5,634.82 today (as of 11/15/2019). On a total return basis, that’s a result of -43.67% (something to think about: how might ALXN 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 function of economic forecasting is to make astrology look respectable.” — John Galbraith