“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 Trimble Inc (NASD: TRMB), by taking a look at the investment outcome over a five year holding period.
| Start date: | 10/20/2016 |
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| End date: | 10/19/2021 | ||||
| Start price/share: | $29.49 | ||||
| End price/share: | $87.04 | ||||
| Starting shares: | 339.10 | ||||
| Ending shares: | 339.10 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 195.15% | ||||
| Average annual return: | 24.17% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $29,517.76 | ||||
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 24.17%. This would have turned a $10K investment made 5 years ago into $29,517.76 today (as of 10/19/2021). On a total return basis, that’s a result of 195.15% (something to think about: how might TRMB 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:
“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently.” — Jack Bogle
