“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 2020, and take a look at what happened to investors who asked that very question about Amazon.com Inc (NASD: AMZN), by taking a look at the investment outcome over a five year holding period.
| Start date: | 09/10/2020 |
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| End date: | 09/09/2025 | ||||
| Start price/share: | $158.76 | ||||
| End price/share: | $238.24 | ||||
| Starting shares: | 62.99 | ||||
| Ending shares: | 62.99 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 50.06% | ||||
| Average annual return: | 8.46% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,008.87 | ||||
As shown above, the five year investment result worked out well, with an annualized rate of return of 8.46%. This would have turned a $10K investment made 5 years ago into $15,008.87 today (as of 09/09/2025). On a total return basis, that’s a result of 50.06% (something to think about: how might AMZN 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:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt
