“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 T-Mobile US Inc (NASD: TMUS), by taking a look at the investment outcome over a five year holding period.
|Average annual return:||24.75%|
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 24.75%. This would have turned a $10K investment made 5 years ago into $30,231.93 today (as of 08/24/2020). On a total return basis, that’s a result of 202.28% (something to think about: how might TMUS 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:
“All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” — Peter Lynch