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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 Salesforce.com Inc (NYSE: CRM) back in 2015, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 05/22/2015
$10,000

05/22/2015
$23,367

05/21/2020
End date: 05/21/2020
Start price/share: $75.01
End price/share: $175.26
Starting shares: 133.32
Ending shares: 133.32
Dividends reinvested/share: $0.00
Total return: 133.65%
Average annual return: 18.49%
Starting investment: $10,000.00
Ending investment: $23,367.40

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 18.49%. This would have turned a $10K investment made 5 years ago into $23,367.40 today (as of 05/21/2020). On a total return basis, that’s a result of 133.65% (something to think about: how might CRM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more piece of investment wisdom to leave you with:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” — Benjamin Graham