The "Do-Nothing Forever" List of Best Stocks

By | July 10, 2015 Leave a Comment

The best long-term investments never expire

I’ve been investing for over eight years, which to some of you out there, may not seem like very long.  But in that short span of time, I’ve seen a lot of things happen… very bad things… and unheard of things… but also experienced and followed a lot of unique situations in the markets, which I feel have put me ahead of the pack when it comes to investing and growing wealth.

When I first started out, I was really scared. I’d been married less than a year, and I got up the courage to ask my lovely lady for permission to start investing some of our stashed cash—a starting amount of around $2000. At the time, I was still finishing college, and she was the “breadwinner,” so I almost literally COULDN’T screw this up, otherwise it was all over for me for a few years— and time is precious. After all, money is time. Or is it the other way around?

Anyway, I think we all know what kind of crap was hitting the fan in the fall of 2008.

Yep. The death knell had been sounding for quite some time. Housing market crashing. Market pandemonium. People jumping off the tops of building. Equities (basic stocks), mutual funds, and basically every other type of plain vanilla investment that the average individual investor buys lost nearly half its value over the next eight months (if they were lucky) before finally bottoming out in March 2009.

That pandemonium also engulfed everything I personally owned. Luckily, I was able to convince the woman of the house that it wasn’t just ME and my stupid mistakes (although it was, partially) that wreaked such havoc on our little stash. So I got a second chance.

I made some really other stupid mistakes along the way, like thinking I could be a wildcat day-trading genius on my iPod at work, on my laptop during my college classes, and in my free time at night. But, as you can probably imagine, I made more stupid mistakes. I almost literally blew up my entire account. If could have deposited a virtual brick of thermite C4 I into my brokerage account and then hit the detonator on that bad boy, this is pretty much how my account would have looked in the aftermath:

And I’m the guy lying dead and on fire in the background.

Let me tell you, those days are over. Not one of those stupid strategies worked, nor will they ever, for someone of so little means and sophistication.

Back then, I was the gambler… and the guys on the other end of the trades were the casino. The odds were stacked against me: lack of time, experience, access to technology, information you name it. They were all killing me slowly.

That’s when I realized that it was time to become the casino, not the gambler.

How to become the "house," not the gambler

The “house” always comes out on top. It gives its patrons games to play whose odds are stacked against them 100 to 1. Gamblers walk in from the street, think they are geniuses, and think they’re going to walk out being able to retire tomorrow.

Another way to think about this is insurance companies. We all pay insurance premiums every month, betting (essentially) that our car is eventually going to get in an accident. And yet, most of us never do. That’s money down the toilet. But the insurance companies…. They ALWAYS come out ahead.

You, I, and everyone else dedicated to the principles of the Village WILL retire early, but not tomorrow. We’ll play the “gambling” game, but we’ll be on the winning side. And being on that side doesn’t require a PhD in mathematics, statistics, or econometrics. It doesn’t require a complicated algorithmic formula, sophisticated technology, or inside information. It just requires common sense and an understanding of basic principles.

It also requires having a list of great “Go-To” companies to invest in—safe and predictable ones—which have the following factors:
  • They lead their industries, have rock-solid financials, indispensable products, are ideally recession-proof, and have big enough market share that their product isn’t going away any time soon
  • The company has had a recent "fluke" share price drop that will give us an opportunity to buy or trade at lower prices where the odds of winning are stacked highly in our favor
  • Where possible, share prices which are reasonable enough to allow us to sell options for income and still stay within our general portfolio position sizing rules (on smaller portfolios, this is in the $20-$40 range)
  • Higher than usual recent price volatility (price fluctuation). This means we’ll get more bang for our buck when we sell options on shares we own, because higher volatility = higher prices

With that in mind, I present to you my Short List of stocks to buy and trade off of, all of which tend to meet about 90% of the above guidelines. Here are the ones trading in the lower price range:

o   Intel Corp (INTC)
o   Coca-Cola (KO)
o   Cisco, Inc. (CSCO)
o   Sysco Food Corporation (SYY)
o   Oracle (ORCL)
o   AT&T (T)
o   Microsoft( MSFT)
o   Blackstone Mortgage REIT (BXMT)
o   Altria (MO)
o   Dow Chemical Company (DOW)

And, here are some in the higher price range (higher price does NOT mean more expensive)

  • Qualcomm (QCOM)
  • Wal-Mart (WMT)
  • McDonald’s (MCD)
  • Apple (AAPL)
  • Johnson & Johnson (JNJ)
  • Chevron (CVX)
  • Hershey (HSY)
  • Proctor & Gamble (PNG)
  • Automatic Data Processing (ADP)
  • IBM (IBM
  • AB InBev (BUD)
  • ExxonMobil (XOM) 
  • 3M Co (MMM) 
  • Corning Glass (GLW) 
  • Constellation Brands (CTZ) 
  • Sysco Foods (SYY)

You almost can’t go wrong with these companies. Of course, some of them are “less safe” than others--those which are commodity-based, like Chevron, ExxonMobil, and Panhandle. Other than that, you almost have nothing to worry about here.

Per our position sizing limits, put no more than 4-5% of your money into each of these recommendations. For smaller portfolios under $10,000 put NO MORE THAN 10% of your money into each of these industry-dominating companies, and you’ll have a well-balanced portfolio.

Never bought an individual stock before, or don't even have an individual brokerage account? Start here.

So there you have it. If you have any questions, click the “Contact” button above for my contact email.

Live long and invest,

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