“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Advanced Micro Devices Inc (NASD: AMD) back in 2015: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.
|Average annual return:||116.43%|
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 116.43%. This would have turned a $10K investment made 5 years ago into $475,889.34 today (as of 09/28/2020). On a total return basis, that’s a result of 4,659.28% (something to think about: how might AMD shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“We ignore outlooks and forecastsâ€¦ we’re lousy at it and we admit it â€¦ everyone else is lousy too, but most people won’t admit it.” — Martin Whitman