“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 Amazon.com Inc (NASD: AMZN) back in 2015, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 08/24/2015 |
|
|||
| End date: | 08/21/2020 | ||||
| Start price/share: | $463.37 | ||||
| End price/share: | $3,284.72 | ||||
| Starting shares: | 21.58 | ||||
| Ending shares: | 21.58 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 608.88% | ||||
| Average annual return: | 47.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $70,884.10 | ||||
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 47.98%. This would have turned a $10K investment made 5 years ago into $70,884.10 today (as of 08/21/2020). On a total return basis, that’s a result of 608.88% (something to think about: how might AMZN 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:
“Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass.” — Jack Bogle
