“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 Illumina Inc (NASD: ILMN), by taking a look at the investment outcome over a five year holding period.
| Start date: | 08/11/2015 |
|
|||
| End date: | 08/10/2020 | ||||
| Start price/share: | $208.59 | ||||
| End price/share: | $353.35 | ||||
| Starting shares: | 47.94 | ||||
| Ending shares: | 47.94 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 69.40% | ||||
| Average annual return: | 11.11% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,939.13 | ||||
As shown above, the five year investment result worked out quite well, with an annualized rate of return of 11.11%. This would have turned a $10K investment made 5 years ago into $16,939.13 today (as of 08/10/2020). On a total return basis, that’s a result of 69.40% (something to think about: how might ILMN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“The four most dangerous words in investing are: ‘this time it’s different.'” — Sir John Templeton
