“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into NVR Inc. (NYSE: NVR)? Today, we examine the outcome of a five year investment into the stock back in 2016.
| Start date: | 02/03/2016 |
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| End date: | 02/02/2021 | ||||
| Start price/share: | $1,611.86 | ||||
| End price/share: | $4,509.98 | ||||
| Starting shares: | 6.20 | ||||
| Ending shares: | 6.20 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 179.80% | ||||
| Average annual return: | 22.83% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $27,974.80 | ||||
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 22.83%. This would have turned a $10K investment made 5 years ago into $27,974.80 today (as of 02/02/2021). On a total return basis, that’s a result of 179.80% (something to think about: how might NVR 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:
“You can’t be a good value investor without being an independent thinker; you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do.” — Joel Greenblatt
