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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 Advanced Micro Devices Inc (NASD: AMD) 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: 05/16/2016
$10,000

05/16/2016
$192,833

05/13/2021
End date: 05/13/2021
Start price/share: $3.79
End price/share: $73.09
Starting shares: 2,638.52
Ending shares: 2,638.52
Dividends reinvested/share: $0.00
Total return: 1,828.50%
Average annual return: 80.85%
Starting investment: $10,000.00
Ending investment: $192,833.55

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 80.85%. This would have turned a $10K investment made 5 years ago into $192,833.55 today (as of 05/13/2021). On a total return basis, that’s a result of 1,828.50% (something to think about: how might AMD 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:
“Be fearful when others are greedy; be greedy when others are fearful.” — Warren Buffett