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“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 2016, and take a look at what happened to investors who asked that very question about SVB Financial Group (NASD: SIVB), by taking a look at the investment outcome over a five year holding period.

Start date: 01/22/2016


End date: 01/21/2021
Start price/share: $104.40
End price/share: $455.59
Starting shares: 95.79
Ending shares: 95.79
Dividends reinvested/share: $0.00
Total return: 336.39%
Average annual return: 34.25%
Starting investment: $10,000.00
Ending investment: $43,643.74

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 34.25%. This would have turned a $10K investment made 5 years ago into $43,643.74 today (as of 01/21/2021). On a total return basis, that’s a result of 336.39% (something to think about: how might SIVB 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:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” — Benjamin Graham