If I Could Only Buy and Hold a Single Stock, This Would Be It

By Investor Empires On Nov 28, 2024

Let’s try a little thought experiment. What if I can only buy one stock today and have to hold it forever?

Which indicator can withstand enormous pressure? I would need something with the consistency to remain relevant for decades. It has to work across many different industries and sectors, giving my portfolio a single index Some aspects of diversification. And of course, I would claim a company with global leaders. This team will be trusted with my entire virtual nest egg, after all.

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Choosing an index fund would be a withdrawal. ETF tracking Standard & Poor’s 500 (SNPINDEX: ^GSPC) A market index would fit the bill perfectly with instant diversification and essentially eternal staying power. It also functions like a single stock in many ways, and can be traded just as easily. but again, Vanguard S&P 500 ETF (NYSEMKT: flight) Actually not a single stock. Therefore, it does not conform to the rules of my ridiculous thought experiment.

Initially, I thought of two tech giants that operate across multiple sectors. Amazon (Nasdaq: AMZN) It will allow me to learn about e-commerce, physical retail stores, artificial intelligence (AI), cloud computing, shipping services, and more. alphabet (NASDAQ:GOG) (Nasdaq: Google) It is largely focused on online search and advertising, supported by digital video platforms, Android-powered mobile computing, the nascent robotaxi service, and so on. Both companies look poised to stay in business and surprise consumers with new business ideas for a long time.

But this is still not suitable for this experiment. Alphabet and Amazon can only offer a limited amount of diversification, outside of the immediate safety of a suitable index fund.

This requirement narrows my range of potential stock choices significantly. In the end, there is only one company that can meet my demands. Say hello to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRC.B) – The closest thing to an index fund in the form of a single company.

First and foremost, Berkshire’s diversified business portfolio is legendary. It’s an insurance company at heart, home to auto insurance giant GEICO and 13 wholly-owned insurance brands. But the company also has Duracell batteries, BNSF rails, Kraft Heinz in your refrigerator, Dairy Queen for take-out, and much more. I counted nearly 70 brands in Berkshire’s list of companies under its direct control.

And this is just the beginning. Berkshire also manages a large portfolio of equity investments. There are 46 stocks in that group of minority investments, led by… apple (Nasdaq: Apple) The value of investments currently amounts to about $70.5 billion. The list includes several multinational banks, food giants, a leading Chinese electric vehicle company, and a $2 billion stake in Amazon.

Berkshire’s investments focus on the financial services and industrial sectors, but there are plenty of other operations here. This is not a completely comprehensive snapshot of the economic sector, but I challenge you to find a closer approximation.

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The quality of a company lies in its leadership, and Berkshire Hathaway is led by major investor Warren Buffett. Under this unbeatable name at the top, Berkshire gives free rein to each business unit’s management team.

Buffett is known to prefer investing in businesses that are so simple that a ham sandwich can run them effectively. And he Still Insist on letting high-quality leaders run this foolproof business. This is an additional layer of security, insulating Berkshire and its investors from the risks of business operations.

It’s understandable to worry about what might happen when Warren Buffett stops running Berkshire Hathaway’s wonderful business anymore. Longtime business partner and Vice Chairman of Berkshire Charlie Munger He died A year ago at the age of 99, Buffett was only a few years younger. Berkshire Hathaway won’t be “Buffett’s company” for decades. So what happens when the legendary investor steps down?

Honestly, I don’t expect any major changes. Buffett has already left important portfolio decisions in the hands of trusted lieutenants, who have learned from the best and should be able to maintain the Buffett and Munger strategy over the long term. For example, Todd Combs and Ted Weschler reportedly led a purchase of Apple stock in 2016. This purchase certainly had the blessing of Buffett and/or Munger, but it was not their decision.

Long story short: Berkshire Hathaway has a slew of top-tier fund managers. The company may lose a step when Buffett steps away, but the company should do just fine in the coming decades.

So where does this little thought experiment lead us? Right to Berkshire Hathaway’s doorstep. With its hand in everything from insurance to ice cream and under the steady hand of its investment dream team, Berkshire is your best bet for a “forever stock.” Of course, nothing is guaranteed in the market. But if I had to put all my eggs in one basket and hold on for dear life, I could do a lot worse than hitch my wagon to Buffett’s insurance-based group.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anders Billund He has positions in Alphabet, Amazon, and the Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, and the Vanguard S&P 500 ETF. The Motley Fool has Disclosure policy.

If I could only buy and hold one stock, this would be it Originally published by The Motley Fool