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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 Ulta Beauty Inc (NASD: ULTA) 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: 12/20/2016


End date: 12/17/2021
Start price/share: $260.89
End price/share: $380.94
Starting shares: 38.33
Ending shares: 38.33
Dividends reinvested/share: $0.00
Total return: 46.02%
Average annual return: 7.87%
Starting investment: $10,000.00
Ending investment: $14,599.00

As shown above, the five year investment result worked out well, with an annualized rate of return of 7.87%. This would have turned a $10K investment made 5 years ago into $14,599.00 today (as of 12/17/2021). On a total return basis, that’s a result of 46.02% (something to think about: how might ULTA 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’ve got to be careful if you don’t know where you’re going, ’cause you might not get there.” — Yogi Berra