“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 Adobe Inc (NASD: ADBE), by taking a look at the investment outcome over a five year holding period.
| Start date: | 08/11/2017 |
|
|||
| End date: | 08/10/2022 | ||||
| Start price/share: | $146.47 | ||||
| End price/share: | $438.40 | ||||
| Starting shares: | 68.27 | ||||
| Ending shares: | 68.27 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 199.31% | ||||
| Average annual return: | 24.52% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $29,936.12 | ||||
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 24.52%. This would have turned a $10K investment made 5 years ago into $29,936.12 today (as of 08/10/2022). On a total return basis, that’s a result of 199.31% (something to think about: how might ADBE shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” — Albert Einstein
