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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

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Illumina Inc (NASD: ILMN) back in 2016: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 11/07/2016


End date: 11/04/2021
Start price/share: $137.08
End price/share: $421.83
Starting shares: 72.95
Ending shares: 72.95
Dividends reinvested/share: $0.00
Total return: 207.73%
Average annual return: 25.25%
Starting investment: $10,000.00
Ending investment: $30,766.99

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 25.25%. This would have turned a $10K investment made 5 years ago into $30,766.99 today (as of 11/04/2021). On a total return basis, that’s a result of 207.73% (something to think about: how might ILMN 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:
“The function of economic forecasting is to make astrology look respectable.” — John Galbraith