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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

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 Netflix Inc (NASD: NFLX) back in 2016, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 08/25/2016


End date: 08/24/2021
Start price/share: $97.32
End price/share: $553.41
Starting shares: 102.75
Ending shares: 102.75
Dividends reinvested/share: $0.00
Total return: 468.65%
Average annual return: 41.57%
Starting investment: $10,000.00
Ending investment: $56,866.46

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 41.57%. This would have turned a $10K investment made 5 years ago into $56,866.46 today (as of 08/24/2021). On a total return basis, that’s a result of 468.65% (something to think about: how might NFLX 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:
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert Allen