“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 2016, and take a look at what happened to investors who asked that very question about Autodesk Inc (NASD: ADSK), by taking a look at the investment outcome over a five year holding period.
| Start date: | 11/17/2016 |
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| End date: | 11/16/2021 | ||||
| Start price/share: | $78.46 | ||||
| End price/share: | $333.64 | ||||
| Starting shares: | 127.45 | ||||
| Ending shares: | 127.45 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 325.24% | ||||
| Average annual return: | 33.58% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $42,531.16 | ||||
The above analysis shows the five year investment result worked out exceptionally well, with an annualized rate of return of 33.58%. This would have turned a $10K investment made 5 years ago into $42,531.16 today (as of 11/16/2021). On a total return basis, that’s a result of 325.24% (something to think about: how might ADSK shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Charlie Munger
