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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

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 Booking Holdings Inc (NASD: BKNG) back in 2016: 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: 04/26/2016
$10,000

04/26/2016
$17,960

04/23/2021
End date: 04/23/2021
Start price/share: $1,333.95
End price/share: $2,395.43
Starting shares: 7.50
Ending shares: 7.50
Dividends reinvested/share: $0.00
Total return: 79.57%
Average annual return: 12.44%
Starting investment: $10,000.00
Ending investment: $17,960.78

As shown above, the five year investment result worked out quite well, with an annualized rate of return of 12.44%. This would have turned a $10K investment made 5 years ago into $17,960.78 today (as of 04/23/2021). On a total return basis, that’s a result of 79.57% (something to think about: how might BKNG 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:
“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.” — Benjamin Graham