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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 above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?

Today, let’s look backwards in time to 2015, and take a look at what happened to investors who asked that very question about DexCom Inc (NASD: DXCM), by taking a look at the investment outcome over a five year holding period.

Start date: 07/28/2015


End date: 07/27/2020
Start price/share: $83.41
End price/share: $423.43
Starting shares: 119.89
Ending shares: 119.89
Dividends reinvested/share: $0.00
Total return: 407.65%
Average annual return: 38.37%
Starting investment: $10,000.00
Ending investment: $50,768.71

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 38.37%. This would have turned a $10K investment made 5 years ago into $50,768.71 today (as of 07/27/2020). On a total return basis, that’s a result of 407.65% (something to think about: how might DXCM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott