“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2018, investors considering an investment into shares of Molina Healthcare Inc (NYSE: MOH) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.
| Start date: | 12/28/2018 |
|
|||
| End date: | 12/27/2023 | ||||
| Start price/share: | $113.66 | ||||
| End price/share: | $356.83 | ||||
| Starting shares: | 87.98 | ||||
| Ending shares: | 87.98 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 213.95% | ||||
| Average annual return: | 25.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $31,394.18 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 25.71%. This would have turned a $10K investment made 5 years ago into $31,394.18 today (as of 12/27/2023). On a total return basis, that’s a result of 213.95% (something to think about: how might MOH shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
