“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 O’Reilly Automotive, Inc. (NASD: ORLY) 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: | 12/05/2019 |
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| End date: | 12/04/2024 | ||||
| Start price/share: | $441.04 | ||||
| End price/share: | $1,242.92 | ||||
| Starting shares: | 22.67 | ||||
| Ending shares: | 22.67 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 181.82% | ||||
| Average annual return: | 23.01% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,180.49 | ||||
As we can see, the five year investment result worked out exceptionally well, with an annualized rate of return of 23.01%. This would have turned a $10K investment made 5 years ago into $28,180.49 today (as of 12/04/2024). On a total return basis, that’s a result of 181.82% (something to think about: how might ORLY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Twenty years in this business convinces me that any normal person using the customary three percent of the brain can pick stocks just as well, if not better, than the average Wall Street expert.” — Peter Lynch
