Photo credit: commons.wikimedia.org

“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 Waters Corp. (NYSE: WAT) 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: 09/20/2018
$10,000

09/20/2018
  $13,953

09/19/2023
End date: 09/19/2023
Start price/share: $197.29
End price/share: $275.29
Starting shares: 50.69
Ending shares: 50.69
Dividends reinvested/share: $0.00
Total return: 39.54%
Average annual return: 6.89%
Starting investment: $10,000.00
Ending investment: $13,953.57

As shown above, the five year investment result worked out well, with an annualized rate of return of 6.89%. This would have turned a $10K investment made 5 years ago into $13,953.57 today (as of 09/19/2023). On a total return basis, that’s a result of 39.54% (something to think about: how might WAT shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“I made my money by selling too soon.” — Bernard Baruch