“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a five year holding period (or even longer), and reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Today, we look at how such a long-term strategy would have done for investors in Amazon.com Inc (NASD: AMZN) back in 2016, holding through to today.
| Start date: | 03/21/2016 |
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| End date: | 03/18/2021 | ||||
| Start price/share: | $553.98 | ||||
| End price/share: | $3,027.99 | ||||
| Starting shares: | 18.05 | ||||
| Ending shares: | 18.05 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 446.59% | ||||
| Average annual return: | 40.51% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $54,667.20 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 40.51%. This would have turned a $10K investment made 5 years ago into $54,667.20 today (as of 03/18/2021). On a total return basis, that’s a result of 446.59% (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.]
More investment wisdom to ponder:
“If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” — Peter Lynch
