“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2016, investors considering an investment into shares of Intuitive Surgical Inc (NASD: ISRG) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.
| Start date: | 05/10/2016 |
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| End date: | 05/07/2021 | ||||
| Start price/share: | $208.85 | ||||
| End price/share: | $857.09 | ||||
| Starting shares: | 47.88 | ||||
| Ending shares: | 47.88 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 310.39% | ||||
| Average annual return: | 32.67% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $41,038.45 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 32.67%. This would have turned a $10K investment made 5 years ago into $41,038.45 today (as of 05/07/2021). On a total return basis, that’s a result of 310.39% (something to think about: how might ISRG 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:
“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” — Charlie Munger
