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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 Akamai Technologies Inc (NASD: AKAM) back in 2018: 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: 02/14/2018
$10,000

02/14/2018
  $13,156

02/13/2023
End date: 02/13/2023
Start price/share: $66.87
End price/share: $87.97
Starting shares: 149.54
Ending shares: 149.54
Dividends reinvested/share: $0.00
Total return: 31.55%
Average annual return: 5.64%
Starting investment: $10,000.00
Ending investment: $13,156.55

As shown above, the five year investment result worked out well, with an annualized rate of return of 5.64%. This would have turned a $10K investment made 5 years ago into $13,156.55 today (as of 02/13/2023). On a total return basis, that’s a result of 31.55% (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.]

One more investment quote to leave you with:
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” — Peter Lynch