Photo credit:

“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 Edwards Lifesciences Corp (NYSE: EW) 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.

Start date: 12/03/2015


End date: 12/02/2020
Start price/share: $26.23
End price/share: $84.47
Starting shares: 381.24
Ending shares: 381.24
Dividends reinvested/share: $0.00
Total return: 222.04%
Average annual return: 26.34%
Starting investment: $10,000.00
Ending investment: $32,209.39

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 26.34%. This would have turned a $10K investment made 5 years ago into $32,209.39 today (as of 12/02/2020). On a total return basis, that’s a result of 222.04% (something to think about: how might EW 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:
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” — Seth Klarman