Good stocks to own without having to pay attention to

[Jurgis]

BTW, with jockey stocks, you pretty much have to believe in the jockey, and possibly not pay attention to the company's financials.

 

How about the following thought experiment. Read "Snowball" (pages 406-425 or so in hardcover edition) and go back in time. The year is 1975. Berkshire stock price has dropped 50%, its largest holding Washington Post is on the edge of going down due to the labor strike (with no recovery if it goes down), Buffett and Munger are being charged by SEC (with possibility of being barred from investing). On the outside inflation is rampant, NYC is close to bankrutpcy (well maybe you don't care about that).

 

Do you think that following Berkshire's business and financials attentively would have made you make the right decision to hold or buy more? :)

 

On the other hand, this thought experiment perhaps shows why it is so hard to outperform with a single stock without survivorship bias. BRK could have died in 1975 in two different ways and Buffett would have never become the super sensation he is now.

[DanielGMask]

I've always get nervious with technology companies since the sustainability of the business model is a question I'm usually not able to answer. MSFT used to have a magnificent moat, but it has been severely damaged by disruptive technologies and I can not make a comfortable guess of what will happen with the Co in 10-20 years.

 

An autopilot program as suggested by the questioner has a few intrinsic pre-requisites I think neither BH nor MSFT deliver:

 

1. Tailwind industry.

2. Honest and competent management.

3. Solid business culture.

4. Sustainable business model.

5. Low risk of obsolescence.

6. Solid history of profits and good return of equity.

 

Among many other necessary requisites to conclude you have found another Berkshire.

 

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.

[Guest longinvestor]

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.

 

uh-oh! You appear to be a lot like me. And you may have just hurt the sensibilities of several around this board by expressing faith in Warren Buffett's abilities. You may have just crossed that line ;)

 

Besides you and I who are doing OK, there are 100's (1000's?) of super wealthy investors who have done little more than own Berkshire for many years. Only that these folks don't post here and the closest thing they do to keep up with their ownership is to attend the meeting in Omaha in May. They are perhaps are not smart enough to do 3-pieces-of-paper-investing, checklists, strategies, know a lot of investing terms, read 550 pages of 10k/l/m/n/o/p/q's etc. But they are rich! But let's not allow the facts come in the way of great story-telling. 

 

 

[Hielko]

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.

How did they manage owning a sizable Berkshire stake?

[KCLarkin]

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.

How did they manage owning a sizable Berkshire stake?

 

They owned a railroad that was eventually bought by BNSF.

[TorontoRaptorsFan]

Berkshire Hathaway & Apple - Excellent management teams, with lots of cash sitting on their books

Brookfield Asset Management - Bruce Flatt and team run a tight ship. He continues to accumulate shares and will eventually become a billionaire.

Google - Have their fingers in some incredible new technology - deep learning, quantum computing, pushing envelope on driverless cars, excellent management & can hire the best of the best

Goldman Sachs - legacy, staff, management, alumni, Berkshire endorsed

Chipotle - people need to eat, loyal fans of the product, still have many more locations to open

Disney - ESPN, ABC, Marvel, Lucasfilm, theme parks

 

[Guest Schwab711]

Berkshire Hathaway & Apple - Excellent management teams, with lots of cash sitting on their books

Brookfield Asset Management - Bruce Flatt and team run a tight ship. He continues to accumulate shares and will eventually become a billionaire.

Google - Have their fingers in some incredible new technology - deep learning, quantum computing, pushing envelope on driverless cars, excellent management & can hire the best of the best

Goldman Sachs - legacy, staff, management, alumni, Berkshire endorsed

Chipotle - people need to eat, loyal fans of the product, still have many more locations to open

Disney - ESPN, ABC, Marvel, Lucasfilm, theme parks

 

I would at least keep tabs on Apple, BAM, GS, especially Chipotle, and Disney (ESPN has some big changes to experience in the future). Although I suppose if GS runs into problems everyone will...

 

 

My personal list would be:

BRK

JPM

TDG

MCO/MHFI

FICO

TSS/GPN

BR

MA/V

TDG

LUX

 

I'm very biased towards the finance industry but standard services become embedded within every companies operations and don't often change or get un-seated.