“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 2018, 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: | 11/14/2018 |
|
|||
| End date: | 11/13/2023 | ||||
| Start price/share: | $129.43 | ||||
| End price/share: | $210.10 | ||||
| Starting shares: | 77.26 | ||||
| Ending shares: | 77.26 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 62.33% | ||||
| Average annual return: | 10.17% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,229.93 | ||||
The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 10.17%. This would have turned a $10K investment made 5 years ago into $16,229.93 today (as of 11/13/2023). On a total return basis, that’s a result of 62.33% (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.]
One more piece of investment wisdom to leave you with:
“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.” — Martin Whitman
