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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 Micron Technology Inc. (NASD: MU), by taking a look at the investment outcome over a five year holding period.

Start date: 02/18/2016
$10,000

02/18/2016
$74,887

02/17/2021
End date: 02/17/2021
Start price/share: $11.49
End price/share: $86.05
Starting shares: 870.32
Ending shares: 870.32
Dividends reinvested/share: $0.00
Total return: 648.91%
Average annual return: 49.55%
Starting investment: $10,000.00
Ending investment: $74,887.78

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 49.55%. This would have turned a $10K investment made 5 years ago into $74,887.78 today (as of 02/17/2021). On a total return basis, that’s a result of 648.91% (something to think about: how might MU 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:
“The most important three words in investing is: “I don’t know.” If someone doesn’t say that to you then they are lying.” — James Altucher