“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 2015, and take a look at what happened to investors who asked that very question about Salesforce.com Inc (NYSE: CRM), by taking a look at the investment outcome over a five year holding period.
| Start date: | 02/17/2015 |
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| End date: | 02/13/2020 | ||||
| Start price/share: | $62.07 | ||||
| End price/share: | $188.64 | ||||
| Starting shares: | 161.11 | ||||
| Ending shares: | 161.11 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 203.91% | ||||
| Average annual return: | 24.94% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $30,388.74 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 24.94%. This would have turned a $10K investment made 5 years ago into $30,388.74 today (as of 02/13/2020). On a total return basis, that’s a result of 203.91% (something to think about: how might CRM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” — Warren Buffett
