“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 Salesforce.com Inc (NYSE: CRM) back in 2016, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 06/01/2016 |
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| End date: | 05/28/2021 | ||||
| Start price/share: | $83.45 | ||||
| End price/share: | $238.10 | ||||
| Starting shares: | 119.83 | ||||
| Ending shares: | 119.83 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 185.32% | ||||
| Average annual return: | 23.37% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,529.76 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 23.37%. This would have turned a $10K investment made 5 years ago into $28,529.76 today (as of 05/28/2021). On a total return basis, that’s a result of 185.32% (something to think about: how might CRM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger
