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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 Illumina Inc (NASD: ILMN), by taking a look at the investment outcome over a five year holding period.

Start date: 08/11/2015
$10,000

08/11/2015
$16,939

08/10/2020
End date: 08/10/2020
Start price/share: $208.59
End price/share: $353.35
Starting shares: 47.94
Ending shares: 47.94
Dividends reinvested/share: $0.00
Total return: 69.40%
Average annual return: 11.11%
Starting investment: $10,000.00
Ending investment: $16,939.13

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 11.11%. This would have turned a $10K investment made 5 years ago into $16,939.13 today (as of 08/10/2020). On a total return basis, that’s a result of 69.40% (something to think about: how might ILMN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

More investment wisdom to ponder:
“The four most dangerous words in investing are: ‘this time it’s different.'” — Sir John Templeton