“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 2017, and take a look at what happened to investors who asked that very question about Chipotle Mexican Grill Inc (NYSE: CMG), by taking a look at the investment outcome over a five year holding period.
| Start date: | 04/17/2017 |
|
|||
| End date: | 04/13/2022 | ||||
| Start price/share: | $469.89 | ||||
| End price/share: | $1,590.00 | ||||
| Starting shares: | 21.28 | ||||
| Ending shares: | 21.28 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 238.38% | ||||
| Average annual return: | 27.66% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $33,837.83 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 27.66%. This would have turned a $10K investment made 5 years ago into $33,837.83 today (as of 04/13/2022). On a total return basis, that’s a result of 238.38% (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.]
Here’s one more great investment quote before you go:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch
