“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 2018, and take a look at what happened to investors who asked that very question about Tesla Inc (NASD: TSLA), by taking a look at the investment outcome over a five year holding period.
| Start date: | 04/25/2018 |
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| End date: | 04/24/2023 | ||||
| Start price/share: | $18.71 | ||||
| End price/share: | $162.55 | ||||
| Starting shares: | 534.47 | ||||
| Ending shares: | 534.47 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 768.79% | ||||
| Average annual return: | 54.09% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $86,870.49 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 54.09%. This would have turned a $10K investment made 5 years ago into $86,870.49 today (as of 04/24/2023). On a total return basis, that’s a result of 768.79% (something to think about: how might TSLA shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“The best stock to buy is the one you already own.” — Peter Lynch
