“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 Chipotle Mexican Grill Inc (NYSE: CMG) 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: | 11/21/2016 |
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| End date: | 11/18/2021 | ||||
| Start price/share: | $412.38 | ||||
| End price/share: | $1,779.17 | ||||
| Starting shares: | 24.25 | ||||
| Ending shares: | 24.25 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 331.44% | ||||
| Average annual return: | 34.01% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $43,150.85 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 34.01%. This would have turned a $10K investment made 5 years ago into $43,150.85 today (as of 11/18/2021). On a total return basis, that’s a result of 331.44% (something to think about: how might CMG 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 older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.” — T. Boone Pickens
