“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?
Today, let’s look backwards in time to 2016, and take a look at what happened to investors who asked that very question about United Rentals Inc (NYSE: URI), by taking a look at the investment outcome over a five year holding period.
|Average annual return:||33.85%|
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 33.85%. This would have turned a $10K investment made 5 years ago into $42,894.15 today (as of 08/27/2021). On a total return basis, that’s a result of 328.91% (something to think about: how might URI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” — Peter Lynch