If you could only buy one stock for the next 20 years...

[MediumTex]

...what would it be?

After thinking about it for a bit and taking everything into consideration, I would say ExxonMobil (XOM).

I don't currently own any XOM because I am free to buy and sell stocks freely (no 20 year restriction), but if I could only pick one for a long period, that's probably the one I would pick.

If you want to see why, take a look at its 30 year chart.

[moda0306]

Would buying Berkshire Hathaway be a way of diversifying and cheating your question?

[MediumTex]

To me, buying Berkshire would be a bit like buying Sears or Montgomery Ward at their peaks in the past.

At the time, the brand seems bulletproof, but over time one sees that the brand means nothing without good management.

The Sokol debacle should provide Berkshire shareholders with a peek at what life without Warren might be like.

Note that Berskhire is pretty leveraged with its derivatives exposure and the inherent risk that its large insurance businesses represent.

Note also that Berkshire has provided shareholders with ZERO return over the last five years.

Given Berkshire's size and prospect of being without Warren at some point in the next 5-10 years (just based on Warren's age), I would say that the Berkshire story may basically be over.  I wouldn't trust it over the next 20 years.

[AdamA]

How about Altria?

[MediumTex]

How about Altria?

Not bad, but the U.S.'s addiction to oil is probably a little harder to break than its addiction to nicotine.  (I assume you are just talking about MO, which is only the U.S. operations, as I recall.)

Altria also faces a longer term demographic-driven problem of a big chunk of its customers dying in the next couple of decades with relatively fewer new smokers coming in behind them.

[Gumby]

McDonalds.

I don't own any, and probably never will... but it's a great company. It does well during recessions, it offers a nice dividend, and it's constantly growing.

Almost a decade ago people were bearish on McDonalds. Here's a video from 2003 where some money manager gives a very bearish outlook for McDonalds, mostly because they didn't offer the healthy variety of foods that he thought consumers were looking for:

 http://youtube.com/watch?v=W5k5_rv2pew

Boy was he wrong. Almost from the day that interview was recorded, MCD has done nothing but go up by 500%. It's a very well run company and it handled the 2008 crisis very nicely.

[MediumTex]

McDonalds is a good one.  Great play on China as well.

[Gumby]

McDonalds is a good one.  Great play on China as well.

It's amazing what they have done to streamline operations. Everything from the hues and texture of the decor, right down to the diameter of the straws are specifically designed to move people in and out of their restaurants as quickly (or as slowly) as they see fit. Every inch of their properties is designed with specific intentions and goals. It really is an amazing example of money-making in action. Though, I must admit that I haven't eaten in a McDonald's in years!

[Wonk]

This is sort of a bogus choice, but if I were committed for the next 20 years I'd invest in my own company stock and take my chances.

[MediumTex]

This is sort of a bogus choice, but if I were committed for the next 20 years I'd invest in my own company stock and take my chances.

Is that symbol WNK?

[HB Reader]

FWIW  -- XOM and MCD are currently the top individual stock holdings in my VP. 

[MediumTex]

FWIW  -- XOM and MCD are currently the top individual stock holdings in my VP. 

Great minds...

[Storm]

ARM holdings (ARMH) - they don't actually make the chips that are in every smartphone or tablet computer - they license the rights to make them to manufacturers like Samsung and Apple.

Basically, imagine the technology world 10-20 years from now - every man, woman, and child will probably have multiple low power computing devices.  Every one of those generates a licensing fee to ARM.  Everything from smartphones, tablet computers, laptop computers, smart refrigerators, TVs, cars, etc, will have these chips in them.

Also, Microsoft has already announced Windows 8 will be ported to the ARM architecture.  They have to or else they risk losing the entire computing world to Apple.

The big difference between an ARM chip and an Intel chip is that ARM is much more power efficient.  ARM is what allows an iPad to have a 10 hour battery life, while your average PC laptop has a 2-3 hour battery life.

I've found it is usually a very good investment to buy into the fundamental technology that is driving change in the computing industry.  Buying Intel in the 80s would have been a great idea.

[craigr]

Since oil is already taken. I'd say maybe a food producer like Kraft or Monsanto. Or maybe health care like Johnson and Johnson.

[LifestyleFreedom]

Coca Cola (KO)

If I had to choose just one business to own, it would be KO (and I do own KO in my DRIP portfolio, along with many other wonderful businesses).

I don't buy businesses just because Warren Buffett also happens to like them, but Buffett did summarize his reasons why KO is a wonderful business in a few minutes out of this 90-minute video: http://video.google.com/videoplay?docid ... 0849895261#

Also, Coca Cola is the number one brand in the world according to the experts who follow these matters (http://www.interbrand.com/en/knowledge/ ... -2010.aspx).  A strong brand suggests strong earnings power, which drives investment returns over the long term.

[AgAuMoney]

Note also that Berkshire has provided shareholders with ZERO return over the last five years.

Given Berkshire's size and prospect of being without Warren at some point in the next 5-10 years (just based on Warren's age), I would say that the Berkshire story may basically be over.  I wouldn't trust it over the next 20 years.

I agree with your conclusion, but how did you figure the 0% return over the last 5 years?

enterprise value -- seems to be up.  However, there was a dilutive event (which was/is supposedly accretive to earnings) when they recently split brk.b and used it to purchase Burlington Northern Railroad (BNI).  I was holding BNI at the time, and I sold it shortly after the announcement for about Brk's offer because I didn't want to deal with brk.b and fractional shares paid in cash (two different tax treatments) or have my money tied up while my broker processed the acquisition.

market value -- that's a problem, and that's why I prefer dividends instead of depending on fickle market with its premiums and discounts to enterprise value, which usually place me almost always trying to do the wrong thing at the wrong time. 

[AgAuMoney]

Since oil is already taken. I'd say maybe a food producer like Kraft or Monsanto. Or maybe health care like Johnson and Johnson.

I'm hesitant re. Monsanto...  And kraft has not increased their dividend for too long to meet my requirements (I sold my KFT a couple of years ago).  They'd have to show some serious change of attitude before I'd buy back in.

Now does seem likely to be a good time to buy JnJ, what with all the negative news they are pretty beaten down.  So I bought some more. 

I do own JNJ, MCD,  MO (and PM), KO (and PEP), PG, and others...  but no XOM.  I'm glad I don't have to pick just one!    Of those, PG and MCD are probably the ones that have done the best for me the past 15 years (my longest personal experience) and those are hard to choose between.  My PG value doesn't look all that much greater than it did then (it is about 4x what I paid for it and I have about 4x the shares I purchased after two splits) but now I also have SJM and have had other companies and special dividends that PG has spun off over the years.  MCD I've rebalanced out of more than I can remember.

I guess for my kids I have almost done the "just chose one for the next [almost] 20years."  Most recently when my little girl was born I opened a custodial account for her and bought a few shares of MCD.  The older kids hold one or more of PG, JNJ, BP(ouch), GE(2*ouch), and of course CLX for the one that most likes dirt.  I started each kid with one company, and they've helped choose (within my guidelines) others as they had the means and expressed interest.

Of course, SLW has done great the past 2-3 years and has just instituted a dividend.  Maybe they'll be the stock to beat for the next 20! 

[MediumTex]

AgAuMoney,

What do you not like about XOM?

I notice you don't have any energy exposure.  Do you not like the fossil fuels sector at all going forward?

CVX would probably also be another good 20 year pick.

[AgAuMoney]

AgAuMoney,

What do you not like about XOM?

I notice you don't have any energy exposure.  Do you not like the fossil fuels sector at all going forward?

CVX would probably also be another good 20 year pick.

Oh, I wasn't giving a catalog of all my holdings.    But I guess I didn't mention any of my energy holdings...

My favorite holding in that space right now is a partnership, ONEOK Partners (OKS).  They also have a public general partner (OKE) if you don't want to deal with MLP tax issues, but I prefer the partnership.

I've had CVX for about 10 years.  They've done OK for me.  Not stellar.  I also bought some COP this year.

As for XOM...  Their dividend yield is marginal to my threshold and prior to the May correction, did not pass my threshold.  Nothing else comes to mind right now so that might have been all it was.  Their dividend growth stats look respectable and they have a stellar dividend reputation.

(Generally my threshold to invest is about 2.5% yield, but I'll go down to about 2.3% if the company has double-digit dividend growth rate or if there is something else about the company that makes me want to hold it.)

I hold about 45 different tickers, some of them are in more than one account, so there are more.  Like I said, glad I don't have to pick just one!

Some people have wondered about the expense of holding a lot of stocks.  I switch out a few (typically 3 or 4) positions a year for something else.  I also rebalance within an account when a position grows or shrinks too much in relation to the others.  My annual commission expense over the past 12.5 months, totaled across all accounts, is just under 0.02% of my portfolio.  That includes significant expenses related to rollover of two 401(k) accounts 6 months apart, from cache each into Roth and Standard IRAs, an IRA conversion to a Roth, investing annual IRA contributions plus rebalancing a few positions in different accounts.  I expect the next year to be less than that dollar amount, and hopefully an even smaller percentage of the portfolio even if it costs me the same dollar amount.  Mutual funds, even index funds, are not cheap compared to a dividend growth approach.

[MediumTex]

Note also that Berkshire has provided shareholders with ZERO return over the last five years.

Given Berkshire's size and prospect of being without Warren at some point in the next 5-10 years (just based on Warren's age), I would say that the Berkshire story may basically be over.  I wouldn't trust it over the next 20 years.

I agree with your conclusion, but how did you figure the 0% return over the last 5 years?

Just based upon the stock price.

[Coffee]

YUM Brands.

"Because everybody love Fried Chicken and Tacos." 

[MediumTex]

YUM Brands.

"Because everybody love Fried Chicken and Tacos." 

...and pizza.

[Storm]

YUM Brands.

"Because everybody love Fried Chicken and Tacos." 

...and pizza.

You know, I almost expect they will come out with some food monstrosity that combines all 3 of these things.  They should call it the "Triple Down":

[l82start]

i almost bought a "double down" once, the concept looks great kfc chicken bacon cheese  YUM ..  but when i saw the size of the chicken breasts they were using i changed my mind, what a disappointment! they looked like oversize chicken nuggets!! somebody with very small hands got a job holding the sandwich for the commercial, i mean really, this is America a sandwich like that should be gargantuan, what were they thinking....

[Lone Wolf]

i almost bought a "double down" once, the concept looks great kfc chicken bacon cheese  YUM ..   but when i saw the size of the chicken breasts they were using i changed my mind, what a disappointment! they looked like oversize chicken nuggets!! somebody with very small hands got a job holding the sandwich for the commercial, i mean really, this is America a sandwich like that should be gargantuan, what were they thinking....

Oh really??  I was pretty happy with the Double Down when I tried it!

The chicken breasts they used on mine were reasonably-sized (or perhaps only appeared so next to my teeny little lady-hands!)  All in all, a tasty way to down a nice faceful of animal protein.  (And the grilled one has 60g of protein for only 480 calories!)