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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

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a five year holding period for an investor who was considering Netflix Inc (NASD: NFLX) back in 2015, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 02/10/2015


End date: 02/07/2020
Start price/share: $64.85
End price/share: $366.77
Starting shares: 154.20
Ending shares: 154.20
Dividends reinvested/share: $0.00
Total return: 465.57%
Average annual return: 41.47%
Starting investment: $10,000.00
Ending investment: $56,558.28

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 41.47%. This would have turned a $10K investment made 5 years ago into $56,558.28 today (as of 02/07/2020). On a total return basis, that’s a result of 465.57% (something to think about: how might NFLX shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” — Peter Lynch