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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 O’Reilly Automotive, Inc. (NASD: ORLY) back in 2015, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 06/04/2015
$10,000

06/04/2015
$18,950

06/03/2020
End date: 06/03/2020
Start price/share: $222.12
End price/share: $420.95
Starting shares: 45.02
Ending shares: 45.02
Dividends reinvested/share: $0.00
Total return: 89.51%
Average annual return: 13.63%
Starting investment: $10,000.00
Ending investment: $18,950.34

The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 13.63%. This would have turned a $10K investment made 5 years ago into $18,950.34 today (as of 06/03/2020). On a total return basis, that’s a result of 89.51% (something to think about: how might ORLY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Another great investment quote to think about:
“Most investors want to do today what they should have done yesterday.” — Larry Summers