“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2014, investors considering an investment into shares of Advanced Micro Devices Inc (NASD: AMD) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.
|Average annual return:||72.67%|
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 72.67%. This would have turned a $10K investment made 5 years ago into $153,032.84 today (as of 12/06/2019). On a total return basis, that’s a result of 1,430.12% (something to think about: how might AMD 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:
“Buy not on optimism, but on arithmetic.” — Benjamin Graham