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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

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a five year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of CBRE Group Inc (NYSE: CBRE) back in 2016. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 08/08/2016


End date: 08/05/2021
Start price/share: $29.68
End price/share: $98.13
Starting shares: 336.93
Ending shares: 336.93
Dividends reinvested/share: $0.00
Total return: 230.63%
Average annual return: 27.05%
Starting investment: $10,000.00
Ending investment: $33,060.06

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 27.05%. This would have turned a $10K investment made 5 years ago into $33,060.06 today (as of 08/05/2021). On a total return basis, that’s a result of 230.63% (something to think about: how might CBRE 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:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman