Good stocks to own without having to pay attention to

[Scudbucket]

I'd add ROL and UHAL.

[west]

I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong.  Especially with your parents' money.  Assuming they're not doctors or successful entrepreneurs, their remaining "human capital" (the present value of future earnings) probably isn't much anymore.  Do you really want to stake their lifetime earnings on something that you're putting zero effort into?

 

I second the fundamentally weighted index approach and, considering today's market level and the fact that risk-free rates are (most likely) only going to up over the next ten to twenty years, I would definitely spread your purchases out over a year or two at this point.

 

I also would not be adverse to advising a quant approach.  But only do this if you know what you're doing, programming-wise, and have access to professional level data, not the free stuff.  The free stuff isn't *that* bad, but after playing with some of it, big bugs do pop up.  I've found a few in Google Finance and MSN Money.  You don't want some junior level programmer's bad day at the keyboard to turn into a bad retirement for your parents.

[west]

If you do a fundamentally weighted index, make sure to buy an ETF if you're buying in a taxed (regular) account, NOT a mutual fund.  You'll save yourself a lot of tax drag.

[nodnub]

I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong. 

 

 

West, are you saying that you think large caps need to be watched more closely than small/midcaps?  Seems counterintuitive to me.

[west]

I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong. 

 

 

West, are you saying that you think large caps need to be watched more closely than small/midcaps?  Seems counterintuitive to me.

 

There's more stuff going on in large caps, so I don't see how you can't pay attention to them more (if you're being responsible).  To a certain extent you can "set it and forget it", but I think that's a very dangerous assumption to make.  This might work great for ten years, but all of sudden, in year eleven, chicken grease might splatter in the wrong vent and cause your house to burn down!

 

Ok, maybe that's a weak analogy metaphor (?.. English majors, please help out here), but I think you get my point :D

[nodnub]

I think in a high-quality large cap there is high tendency that they will keep performing well for a long period of time. Small companies tend to have less diversified income streams and are more sensitive to business fluctuations.  I also think it's harder to identify the high-quality small companies.

 

From personal experience, SmallCo's seem more likely to have a rights offering, or other corporate action that you need to stay on top of (or you risk getting taken advantage of).

 

In a small cap it's easier for management to lead a buyout at low (unfair) price. Hard for small retail holders to fight for a fair price.

 

Liquidation and Restructuring can happen to any size company, but I have seen it a lot more in small/midcap.

 

Just my personal experience.  Maybe someone with more time and better knack with small companies get do better with them.

[Mephistopheles]

Thanks everyone for your replies and advice, as always it is much appreciated!

 

I should have been more clearer in regards to the type of stocks/funds that I am looking for. I want ones that I don't have to pay attention to, but that also have good capital allocators at the helm. The obvious one is Berkshire that I mentioned, for which I own a large stake in for my folks. Of course, I wouldn't just blindly buy anything, even a mutual fund. I would read up on it enough to make sure I am comfortable trusting that manager with my money.

 

ie, Even though I have barely ever touched Berkshire's financials, I've read much about Buffett and his shareholder letters and probably know just as much about him as the average poster here.

 

In regards to beating the market without doing any work, aka having a free lunch: We've owned Berkshire for many years and it has done just that, and like I said, I have never seriously looked through the 10-k. This is not to say that the future will necessarily be like the past, but I am confident enough in Warren Buffett's abilities from everything that I've learned from him.

 

Thanks again everyone, I will look at all of your suggestions; especially for the mutual funds, as this is an area I know very little about.

[petec]

I see that a bull market definition of risk is now in full force.  ::)

 

^This

 

If you don't want to put in the work to find and follow stocks, focus on asset allocation, dollar cost averaging and rebalancing.  Find a plan you and your family is comfortable with and stick to it.  ETFs and index funds make this easier and cheaper than ever.  Your returns will be acceptable but not outstanding.

 

This is wise advice.

 

Yes - but why is it wiser than doing the same thing with say 50 stocks that, after initial work, you have convinced yourself will last and continue to prosper?  In other words, by creating a very high quality index for yourself rather than letting someone else create one based on size alone.

 

If I understood the original poster correctly, there's no objection to doing *initial* work but he wants to avoid too much *ongoing* work.  I don't think investing in an ETF requires any less ongoing work than investing in, say KO.

[KCLarkin]

I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong. 

 

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

 

Ritholtz: "They were dead."

 

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."

 

[berkshire101]

I would add Realty Income (O) too.  It's a REIT that consistently grows every year by acquiring more real estate.  Pays a monthly dividend too! 

[west]

I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong. 

 

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

 

Ritholtz: "They were dead."

 

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."

 

So that could mean those accounts held mutual funds, ETFs, cash, anything.  They didn't necessarily hold "hand selected high-quality stocks".  There's a lot that that few sentence quote doesn't say.

[west]

If I understood the original poster correctly, there's no objection to doing *initial* work but he wants to avoid too much *ongoing* work.  I don't think investing in an ETF requires any less ongoing work than investing in, say KO.

 

So you're saying that KO is not susceptible to fraud or other tail events?  Also, this implies that KO will "grow to the sky" and always grow faster (and thus get better returns) than the market at large.  Both of these assumptions are very dangerous to make.

 

As a quick aside, part of the reason why Buffett is such a "buy and hold" investor with his funds at Berkshire is that he's subject to corporate tax rates regardless of his holding period.  As individuals, we have the advantage of having long-term capital gains rates kicking in after a year, or no taxes at all in non-taxed accounts.  There's still an advantage to buying and holding forever with the right companies in a taxed account, but the advantage is nowhere near a pronounced as it is for him.

[KCLarkin]

I would add if you're not watching your investments regularly, especially large caps, you're doing it wrong. 

 

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

 

Ritholtz: "They were dead."

 

O'Shaughnessy: "...No, that's close though! They were the accounts of people who forgot they had an account at Fidelity."

 

So that could mean those accounts held mutual funds, ETFs, cash, anything.  They didn't necessarily hold "hand selected high-quality stocks".  There's a lot that that few sentence quote doesn't say.

 

A forgotten basket of almost anything would beat the returns of most active individual investors. I suspect a basket of low-quality stocks bought by monkeys might do the trick:

 

http://www.businessinsider.com/typical-investor-returns-20-years-2014-8

 

 

 

[rpadebet]

Take a look at the mutual fund LEXCX. the ultimate buy and hold. There is no manager. Just a trustee. They bought 20-30 stocks during the great depression and haven't rebalanced or changed anything. They never sell. 0% turnover. Current stocks are direct decedent's of original portfolio.

 

It's beaten SP500 handsomely.

 

Being an index investor is embarrassing actually when you consider this portfolio.

 

 

[The Falcon]

How about pick through the stocks in the wide moat index and pick them up at 52 week lows?

[DanielGMask]

There's only one Warren Buffett and only one! I don't think you can extrapolate that positive experience that easily. Having said that, Bogle answered your question a long time ago and the best path is not through stocks but through Etfs. I've seen that many posts tend to deviate from the substance after some exchange happens and that's happening here. Why? Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks). If you are not willing to invest time to read 10-ks and quarterly fillings, as well as watching your holdings, you shouldn't be investing in the first case.

 

Thanks everyone for your replies and advice, as always it is much appreciated!

 

I should have been more clearer in regards to the type of stocks/funds that I am looking for. I want ones that I don't have to pay attention to, but that also have good capital allocators at the helm. The obvious one is Berkshire that I mentioned, for which I own a large stake in for my folks. Of course, I wouldn't just blindly buy anything, even a mutual fund. I would read up on it enough to make sure I am comfortable trusting that manager with my money.

 

ie, Even though I have barely ever touched Berkshire's financials, I've read much about Buffett and his shareholder letters and probably know just as much about him as the average poster here.

 

In regards to beating the market without doing any work, aka having a free lunch: We've owned Berkshire for many years and it has done just that, and like I said, I have never seriously looked through the 10-k. This is not to say that the future will necessarily be like the past, but I am confident enough in Warren Buffett's abilities from everything that I've learned from him.

 

Thanks again everyone, I will look at all of your suggestions; especially for the mutual funds, as this is an area I know very little about.

[Mephistopheles]

There's only one Warren Buffett and only one! I don't think you can extrapolate that positive experience that easily. Having said that, Bogle answered your question a long time ago and the best path is not through stocks but through Etfs. I've seen that many posts tend to deviate from the substance after some exchange happens and that's happening here. Why? Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks). If you are not willing to invest time to read 10-ks and quarterly fillings, as well as watching your holdings, you shouldn't be investing in the first case.

 

 

Whether or not Berkshire is the only company that can be put on autopilot, I don't know, as I've heard good things about others such as Prem Watsa. If not, I'm happy to invest in mutual funds. I'm sure there are some mutual fund managers that can outperform ETFs.

 

I'm aware that investing requires analysis of the financials, but as with everything, there can be exceptions. That's all I was looking for.

[DanielGMask]

I don't agree with you and I don't think you should be looking for exceptions since I'm not sure you will be able to select them intelligently. We humans tend to find explanations for a lot of things and seem to find correlation in many fields where there are none.

 

If I were you I would be managing my time in order to have some for involving myself in the process of analyzing stocks, but if that's not possible or you are not interested in that then just select an index fund and don't risk your money or your parents money. Good luck!

 

There's only one Warren Buffett and only one! I don't think you can extrapolate that positive experience that easily. Having said that, Bogle answered your question a long time ago and the best path is not through stocks but through Etfs. I've seen that many posts tend to deviate from the substance after some exchange happens and that's happening here. Why? Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks). If you are not willing to invest time to read 10-ks and quarterly fillings, as well as watching your holdings, you shouldn't be investing in the first case.

 

 

Whether or not Berkshire is the only company that can be put on autopilot, I don't know, as I've heard good things about others such as Prem Watsa. If not, I'm happy to invest in mutual funds. I'm sure there are some mutual fund managers that can outperform ETFs.

 

I'm aware that investing requires analysis of the financials, but as with everything, there can be exceptions. That's all I was looking for.

[Jurgis]

Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks).

 

Daniel, meet BRK, FFH, etc.

[rpadebet]

Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks).

 

Daniel, meet BRK, FFH, etc.

Also meet LEXCX. I don't know how much more autopilot you can go.

[sys]

i've become very partial to BAM.  i basically have my BAM position on autopilot (my largest position by a substantial margin).  if there is a reason i shouldn't, I'd like to hear it.

[AzCactus]

Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks).

 

Daniel, meet BRK, FFH, etc.

 

Jurgis I am sure some other folks on here would also include BH

[DanielGMask]

BRK is my largest holding (which earlier in the thread I pointed is not something you should extrapolate with that ease), but not the others. I wouldn't leave my money in autopilot at Fairfax and I don't know who are the "etc."!

 

Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks).

 

Daniel, meet BRK, FFH, etc.

[DanielGMask]

Not in this lifetime. Well, not me!

 

Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks).

 

Daniel, meet BRK, FFH, etc.

 

Jurgis I am sure some other folks on here would also include BH

[texual]

Mine is MSFT, largest position and one that I just add to, or let the dividends accumulate. I've never really had to think about it for many years. I also have a large position in Berkshire Hathaway.