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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: 12/23/2014


End date: 12/20/2019
Start price/share: $178.87
End price/share: $109.75
Starting shares: 55.91
Ending shares: 55.91
Dividends reinvested/share: $0.00
Total return: -38.64%
Average annual return: -9.32%
Starting investment: $10,000.00
Ending investment: $6,134.66

As we can see, the five year investment result worked out poorly, with an annualized rate of return of -9.32%. This would have turned a $10K investment made 5 years ago into $6,134.66 today (as of 12/20/2019). On a total return basis, that’s a result of -38.64% (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.]

More investment wisdom to ponder:
“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.” — Benjamin Graham