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
, to put it simply, they're companies with strong business models
that you can buy, hold, and basically forget about. You can sleep
easily at night owning
But there's a reason we talk about
so much. It's because it's not just us who think this is
the best way to invest. Some of the wealthiest people onWall 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 (NYSE:
Wells Fargo (NYSE:
-- 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 what
can do for you, listen to the first couple minutes of what
Buffett has to say about one of the greatestinvestments he ever
Now, Buffett wasn't able to buy shares of
The Coca-Cola Company (NYSE:
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:
, 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 ago."
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 sodas.
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 behind
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.
-- Brad Briggs
[P.S. -- As I said before, you probably don't want to own
Coca-Cola today if you're looking for a Forever Stock.
Instead, what you want to own is the "next Forever Stock." The
best resource I know of for finding this is with Top Ten Stocks.
For more on what we think makes a good Forever Stock, and how to
gain access to our latest recommendations, go here.
Brad Briggs does not personally hold positions in any securities
mentioned in this article. StreetAuthority LLC does not hold
positions in any securities mentioned in this article.