We talk a lot about "
" here at StreetAuthority. In fact, we practically pound the table
talking about whey we think they're one of the single best
ways we know of to make serious long-term gains in themarket . If
you're not familiar with
But there's a reason we talk aboutWall Street agree. In fact,
that's how many of them made a fortune.
Take Warren Buffett for example. He's famously said, "I never
attempt to make money on the stock market. I buy on the assumption
that they could close the market the next day and not reopen it for
This is how Buffett made a fortune off of stocks like
Johnson & Johnson (
Wells Fargo (
-- he bought them and held them for the long haul.
Now, it's easy to dismiss this example as something only the
rich are able to pull off. After all, you're going to need that
money some day, right? That would be a mistake. To truly understand
the power of whatinvestments he ever made.
Now, Buffett wasn't able to buy shares of
The Coca-Cola Company (
in 1919, of course. He wasn't even alive then.
But he did the next best thing: He bought whenever he saw the
long-term value of thebusiness model .
The billionaire "Oracle of Omaha" began buying stock
in Coca-Cola in 1988. He continued accumulating shares,
winding up with about 100,000 shares in 1995, worth about $1.2
billion. And though the stock is still in the same range as it was
in 1988 (about $36) -- that's after three stock splits. All told,
it would turn out to be one of the best investments his company,
Berkshire Hathaway (NYSE: BRK-B)
, ever made -- and one he still owns today (with a stake of 400
million shares, worth about $15 billion).
This brings to mind another Buffett quote: "Someone's sitting in
the shade today because someone planted a tree a long time
You see, Buffett didn't wait to see how Coca-Cola would deal
with competition from Pepsi. He didn't wait for it to have an
objective value metric like a low price-to-earnings ratio
to tell him when to buy. He just saw that a) Coke was
arguably the most well-known brand in the world, b) it is a
well-run company and c) people will always like to drink
And that's the key lesson about
Put simply, these are the stocks you can buy today and
hold for the rest of your life. When you own them, you no longer
need to worry about things like the "Fiscal Cliff," inflation
, the eurozone or flash-crashes.
This is exactly the reason many Buffett and many
others have owned shares of these stocks for decades. They're
relatively painless to own, and you let the business do all the
hard work for you, crushing the market in the process. As Paul
Tracy, StreetAuthority's co-Founder and Chief Investment Strategist
Top 10 Stocks
newsletter says: "You don't have to trade every day... or every
week... or even every year to beat the market. In fact, your
success actually increases the fewer trades you make and the longer
Action to Take -->
I'm not telling you all this to tell you to go buy Coca-Cola or
Johnson & Johnson now. Sure, they've posted impressive track
records, but I'm not sure they're the best
you'd want to own now. All I'm saying is we
think the simplest way to have any kind of long-term
success in investing is to find a stock you want to hold
forever, invest in it, and then forget about it.