“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 United Airlines Holdings Inc (NASD: UAL) back in 2020: 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: | 02/28/2020 |
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| End date: | 02/27/2025 | ||||
| Start price/share: | $61.59 | ||||
| End price/share: | $92.17 | ||||
| Starting shares: | 162.36 | ||||
| Ending shares: | 162.36 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 49.65% | ||||
| Average annual return: | 8.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,963.80 | ||||
As shown above, the five year investment result worked out well, with an annualized rate of return of 8.39%. This would have turned a $10K investment made 5 years ago into $14,963.80 today (as of 02/27/2025). On a total return basis, that’s a result of 49.65% (something to think about: how might UAL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.” — David Tepper
