“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.
|Average annual return:||62.15%|
As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 62.15%. This would have turned a $10K investment made 5 years ago into $112,094.62 today (as of 06/28/2023). On a total return basis, that’s a result of 1,020.91% (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:
“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