“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 Akamai Technologies Inc (NASD: AKAM), by taking a look at the investment outcome over a five year holding period.
| Start date: | 06/09/2017 |
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| End date: | 06/08/2022 | ||||
| Start price/share: | $48.13 | ||||
| End price/share: | $100.76 | ||||
| Starting shares: | 207.77 | ||||
| Ending shares: | 207.77 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 109.35% | ||||
| Average annual return: | 15.92% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,931.09 | ||||
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 15.92%. This would have turned a $10K investment made 5 years ago into $20,931.09 today (as of 06/08/2022). On a total return basis, that’s a result of 109.35% (something to think about: how might AKAM 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:
“Value investing means really asking what are the best values, and not assuming that because something looks expensive that it is, or assuming that because a stock is down in price and trades at low multiples that it is a bargain.” — Bill Miller
