“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 Verisign Inc (NASD: VRSN), by taking a look at the investment outcome over a five year holding period.
| Start date: | 09/11/2015 |
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| End date: | 09/10/2020 | ||||
| Start price/share: | $69.16 | ||||
| End price/share: | $198.00 | ||||
| Starting shares: | 144.59 | ||||
| Ending shares: | 144.59 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 186.29% | ||||
| Average annual return: | 23.40% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,630.31 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 23.40%. This would have turned a $10K investment made 5 years ago into $28,630.31 today (as of 09/10/2020). On a total return basis, that’s a result of 186.29% (something to think about: how might VRSN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Value investing means really asking what are the best values, and not assuming that because something looks expensive that it is, or assuming that because a stock is down in price and trades at low multiples that it is a bargain.” — Bill Miller
