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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 Inc (NASD: AMZN) 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: 11/11/2016


End date: 11/10/2021
Start price/share: $739.01
End price/share: $3,482.05
Starting shares: 13.53
Ending shares: 13.53
Dividends reinvested/share: $0.00
Total return: 371.18%
Average annual return: 36.34%
Starting investment: $10,000.00
Ending investment: $47,110.36

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 36.34%. This would have turned a $10K investment made 5 years ago into $47,110.36 today (as of 11/10/2021). On a total return basis, that’s a result of 371.18% (something to think about: how might AMZN 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:
“You can’t be a good value investor without being an independent thinker; you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do.” — Joel Greenblatt