Photo credit: commons.wikimedia.org

“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a five year holding period for an investor who was considering Chipotle Mexican Grill Inc (NYSE: CMG) back in 2016, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 05/09/2016
$10,000

05/09/2016
$31,143

05/06/2021
End date: 05/06/2021
Start price/share: $453.17
End price/share: $1,411.41
Starting shares: 22.07
Ending shares: 22.07
Dividends reinvested/share: $0.00
Total return: 211.45%
Average annual return: 25.54%
Starting investment: $10,000.00
Ending investment: $31,143.64

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 25.54%. This would have turned a $10K investment made 5 years ago into $31,143.64 today (as of 05/06/2021). On a total return basis, that’s a result of 211.45% (something to think about: how might CMG 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:
“Price is what you pay. Value is what you get.” — Warren Buffett