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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

The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?

A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a five year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Chipotle Mexican Grill Inc (NYSE: CMG) back in 2017. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:

Start date: 06/19/2017


End date: 06/16/2022
Start price/share: $458.91
End price/share: $1,214.56
Starting shares: 21.79
Ending shares: 21.79
Dividends reinvested/share: $0.00
Total return: 164.66%
Average annual return: 21.52%
Starting investment: $10,000.00
Ending investment: $26,471.28

The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 21.52%. This would have turned a $10K investment made 5 years ago into $26,471.28 today (as of 06/16/2022). On a total return basis, that’s a result of 164.66% (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.]

More investment wisdom to ponder:
“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch