“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 2019, and take a look at what happened to investors who asked that very question about DaVita Inc (NYSE: DVA), by taking a look at the investment outcome over a five year holding period.
| Start date: | 07/10/2019 |
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| End date: | 07/09/2024 | ||||
| Start price/share: | $54.65 | ||||
| End price/share: | $137.92 | ||||
| Starting shares: | 182.98 | ||||
| Ending shares: | 182.98 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 152.37% | ||||
| Average annual return: | 20.33% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $25,240.03 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 20.33%. This would have turned a $10K investment made 5 years ago into $25,240.03 today (as of 07/09/2024). On a total return basis, that’s a result of 152.37% (something to think about: how might DVA 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:
“The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.” — Benjamin Graham
