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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a five year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Netflix Inc (NASD: NFLX) back in 2019: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full five year investment time horizon and then actually held for these past 5 years, here’s how that investment would have turned out.

Start date: 08/27/2019
$10,000

08/27/2019
  $23,654

08/26/2024
End date: 08/26/2024
Start price/share: $291.03
End price/share: $688.44
Starting shares: 34.36
Ending shares: 34.36
Dividends reinvested/share: $0.00
Total return: 136.55%
Average annual return: 18.78%
Starting investment: $10,000.00
Ending investment: $23,654.91

As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 18.78%. This would have turned a $10K investment made 5 years ago into $23,654.91 today (as of 08/26/2024). On a total return basis, that’s a result of 136.55% (something to think about: how might NFLX shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

One more investment quote to leave you with:
“Successful investing is anticipating the anticipations of others.” — John Maynard Keynes