“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into United Airlines Holdings Inc (NASD: UAL)? Today, we examine the outcome of a five year investment into the stock back in 2018.
| Start date: | 10/02/2018 |
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| End date: | 09/29/2023 | ||||
| Start price/share: | $86.71 | ||||
| End price/share: | $42.30 | ||||
| Starting shares: | 115.33 | ||||
| Ending shares: | 115.33 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | -51.22% | ||||
| Average annual return: | -13.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $4,877.33 | ||||
The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -13.39%. This would have turned a $10K investment made 5 years ago into $4,877.33 today (as of 09/29/2023). On a total return basis, that’s a result of -51.22% (something to think about: how might UAL shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Another great investment quote to think about:
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.” — Seth Klarman
