“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Illumina Inc (NASD: ILMN)? Today, we examine the outcome of a five year investment into the stock back in 2018.
| Start date: | 08/23/2018 |
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| End date: | 08/22/2023 | ||||
| Start price/share: | $335.72 | ||||
| End price/share: | $162.94 | ||||
| Starting shares: | 29.79 | ||||
| Ending shares: | 29.79 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | -51.47% | ||||
| Average annual return: | -13.46% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $4,853.83 | ||||
As we can see, the five year investment result worked out poorly, with an annualized rate of return of -13.46%. This would have turned a $10K investment made 5 years ago into $4,853.83 today (as of 08/22/2023). On a total return basis, that’s a result of -51.47% (something to think about: how might ILMN 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:
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.” — Seth Klarman
