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5 Long-term Stocks?
Old 02-09-2006, 09:12 AM   #1
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5 Long-term Stocks?

Can you very intelligent folks give me some stock ideas that I could add to my portfolio? I'm looking to add approx. 5 stocks over the next yr or so. I'm especially interested in very long-term since my goal is to pass this portfolio on to the next generation. (dh and I are early 50s, sons are 23 & 26)

My current holdings are AT&T, Morgan Stanley, GE, Pepsi, and Applied Materials.

Thanks.
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Re: 5 Long-term Stocks?
Old 02-09-2006, 10:03 AM   #2
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Re: 5 Long-term Stocks?

MMM, JNJ, PFE, FO, BPOP, and AVP are a few that I have been adding to in my drip plans. I expect them to be around in my old age with higher dividend payouts 8)
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Re: 5 Long-term Stocks?
Old 02-09-2006, 10:17 AM   #3
 
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Re: 5 Long-term Stocks?

Why not just buy DIA, the Dow Industrial Index??
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Re: 5 Long-term Stocks?
Old 02-09-2006, 10:25 AM   #4
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Re: 5 Long-term Stocks?

Years ago, I bought stocks for the long term. In those days it was MSFT, GE, INTC, PFE, C, MO, etc. Basically just select from the top 20 stocks in the S&P 500.

Over the years, I learned something. Now I would suggest 5 different ETFs instead of individual stocks: VTI, MDY, IWN, EFA, EEM, RWR

FD: I own PFE, C, MO, MDY, EEM.
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Re: 5 Long-term Stocks?
Old 02-09-2006, 10:57 AM   #5
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Re: 5 Long-term Stocks?

Quote:
Originally Posted by kz
I'm especially interested in very long-term
GM... oh, wait, you mean longevity, not profits.

Berkshire Hathaway (BRK.A, BRK.B). If it was a mutual fund it'd be among the top 10 in assets. It's diversified among a number of different industries & companies. It has the advantages of a MF/ETF without the expense ratio.

A more modern equivalent is Danaher (DHR) although I haven't researched these guys for a couple years.

Can five more stocks really diversify you away from single-stock & industry risk? More importantly, is 10-20 basis points for an ETF ER considered too expensive for diversification insurance?
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Re: 5 Long-term Stocks?
Old 02-09-2006, 11:07 AM   #6
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Re: 5 Long-term Stocks?

PAY - Verifone

Expensive but market leader and small enough to have a lot of growth ahead. Full disclosure - I own it.

Of the others mentioned - I own a bit of PFE, my only megacap. JNJ wouldn't be a bad one if you want to stay in the mega range. I think JNJ will provide shareholders with a nice dividend boost with all that cash, especially since the Guidant deal fell through.
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Re: 5 Long-term Stocks?
Old 02-09-2006, 11:38 AM   #7
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Re: 5 Long-term Stocks?

Quote:
Can five more stocks really diversify you away from single-stock & industry risk? More importantly, is 10-20 basis points for an ETF ER considered too expensive for diversification insurance?
very good point. I dont think it can, but my impression from most people on this forum that do invest in individual stocks is that most have the bulk of their net worth in index funds/low cost mutual funds in 401ks, etc. As unclemick calls the individual stock investments: "fun money", which is probably another prerequisite people here have talked about, is it fun or is it work. If it is work, do index funds/etfs.
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Re: 5 Long-term Stocks?
Old 02-09-2006, 11:54 AM   #8
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Re: 5 Long-term Stocks?

I'd trade the AMAT for a dividend payer; semis are a commodity business these days...
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Re: 5 Long-term Stocks?
Old 02-09-2006, 12:02 PM   #9
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Re: 5 Long-term Stocks?

Maddy hit the nail on the head. This is "fun" money only. It's not part of our retirement stash, it's money we can play with and not worry about losing tomorrow.

JNJ and MMM were on my radar screen and are two distinct possibilities. SYS and WAG are other ones...anyone have any comments on these.

Thanks
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Re: 5 Long-term Stocks?
Old 02-09-2006, 12:03 PM   #10
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Re: 5 Long-term Stocks?

Hmmm

Been a while - but one can google on Bernstein's website for for 'The 15 Stock Diversification Myth' - of course his take is NO. But the odds of 'winning' ? aka *if memory serves 1 in 6 (ie better than the S&P).

Academics publish curves - but I haven't gone looking in a while. ?32 stocks gets you 90% of the NYSE. Note - NYSE.

A slice and dicer would laugh and say - duh - what about rest of the world or RE classes or PM.

Performance - IN MY SPECIFIC CASE - is adequate div plus div growth reasonably competitive with inflation - aka the Norwegian widow - a slightly different kettle of fish.

heh heh heh
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Re: 5 Long-term Stocks?
Old 02-09-2006, 12:13 PM   #11
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Re: 5 Long-term Stocks?

I had a boss/guy I worked with for 15 yrs - whose retirement basically was JNJ from his first job out of college. All his 'other stuff' according to him paled in significance - 401k, defined pension, SS, etc. Tom wouldn't give a percentage though - maybe over 50%.

About my age at the old rocket plant.

David Dreman (a contrarian type picker) I believe bought some 3M a while back.

I don't know if he does a Forbes column anymore.
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Re: 5 Long-term Stocks?
Old 02-10-2006, 07:58 AM   #12
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Re: 5 Long-term Stocks?

Here's 5 I've been buying recently:

MMM- I like it in the low 70's...got clobbered on a pretty decent earnings report.
PHM- Diversified homebuilder well off it's 52 wk high...taking share from smaller builders and has a ridiculous forward PE of under 6.
DOW - 9 PE, 3.3 % yield....margin improvements will flow to bottom line as energy costs moderate.
DENN- A pretty cheap family restauranteur...turnaround story
COP - Best big oil just pulled back to under $60...

As always, DYODD.....
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Re: 5 Long-term Stocks?
Old 02-10-2006, 08:28 AM   #13
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Re: 5 Long-term Stocks?

Quote:
Originally Posted by Nords
Berkshire Hathaway (BRK.A, BRK.B). If it was a mutual fund it'd be among the top 10 in assets. It's diversified among a number of different industries & companies. It has the advantages of a MF/ETF without the expense ratio.
Bearing in mind that I used to own an "A" share of the stock and love the idea, I cant buy it now. All I see is the 20-30% drop the day Buffett bites the dust, and him scarfing down more DQ burgers. Along with his second in command in his 80's.

I might be a buyer when the dust settles, although I also cant really fully buy into the mantra that they have a management team in place that can step in and do what buffett/munger have done. Even 80% as well.

Otherwise, why wouldnt anyone who has rubbed elbows with these guys for long enough gone off and run their own funds to great success? Books have been written by people close to them, yet anyone else running a fund or doing it on their own and following "the formula" dont have the same success.

I think whatever it is, its not learned. Its inherent.
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Re: 5 Long-term Stocks?
Old 02-10-2006, 08:29 AM   #14
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Re: 5 Long-term Stocks?

One other thing...look at what this list would have been just six or seven years ago...

Would it have been intel, cisco, microsoft, dell and amazon?

or would it have been enron, worldcom, aig, tyco and adelphia?

*zing*
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Re: 5 Long-term Stocks?
Old 02-10-2006, 11:41 AM   #15
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Re: 5 Long-term Stocks?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
Bearing in mind that I used to own an "A" share of the stock and love the idea, I cant buy it now.* All I see is the 20-30% drop the day Buffett bites the dust, and him scarfing down more DQ burgers.* Along with his second in command in his 80's.
You dirty market timer, are you avoiding or embracing volatility? You'll feel better after a Coke, a steak dinner at Gorat's, & a DQ ice cream... with maybe a Borsheim's diamond pinky ring?

I could be wrong, but here's my opinon. I think Buffett's PR staff (both of them) are massaging his demise into the public psyche to make his passing less traumatic on the stock price than the unexpected death of any other 50-something executive. Alice Schroeder's forthcoming biography will probably devote a few pages to the question as well. Or maybe she's hoping to overdose him on cherry Cokes and boost her book sales in memoriam.

Susan's death didn't cause much of a ripple although her foundation is steadily selling shares and his foundation will eventually be doing the same.

The day Buffett wakes up dead, the arb sharks will start circling with rumors about Berkshire's breakup value and the need to fill the power vacuum with executives who'll "unlock the potential" or "turn the cash hoard into dividends". Gates' addition to the board is intended to facilitate that process by lending it a little credibility.

But I'd only add to our Berkshire holdings on big dips.

Quote:
Originally Posted by (Cute Fuzzy Bunny)
Otherwise, why wouldnt anyone who has rubbed elbows with these guys for long enough gone off and run their own funds to great success? Books have been written by people close to them, yet anyone else running a fund or doing it on their own and following "the formula" dont have the same success.
Good question. Maybe people stay with Buffett because they're lazy? I'm not sure there's any reason to compete against him when you can do at least as well working with him.

The CEOs who he buys out have all their estate-tax issues resolved at one swoop, and as an unexpected bonus they get to keep running their companies without someone nitpicking their judgment. They can even tap Berkshire for cheap expansion capital. With most of these guys it's the game, not the fortunes, so they probably don't have a compelling reason to leave... unlike Michael Capellas being bought by Carly Fiorina.

When Bill Miller buys a company's stock, management doesn't have to give a @#$% what he thinks. When Buffett (or Kerkorian or Icahn) start buying a company's stock, the execs have to start worrying about board seats, breakup value, and other "value enhancers". There's a difference between being "just" a deep value investor as opposed to someone who will help you fix your business whether you like it or not.

I think Buffett's record with his CEOs makes him one of the world's best bosses, and anyone who can't get along with Buffett would probably also be challenged at running a better business. Maybe all the other executives & VCs wonder how bad you have to be to quit Buffett and won't answer your calls?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
I think whatever it is, its not learned. Its inherent.
I think Buffett's talent is a genetic quirk, but I think it's been honed by years of practice. Charlie Munger helps keep him focused too. I don't think most people can learn how to do what Buffett does without first having that genetic advantage.

Hey, I could just be whistling past the graveyard while it's 30% of our retirement portfolio. But we won't need to touch the Berkshire holdings for a couple decades (arguably Buffett won't be running the company in 2026), we can handle the volatility because of the stock's intrinsic value, and we trust that the guy has prepared the company & his investors for his death.

I worry less about Buffett than about Tweedy, Browne selling out to AMG back in '97, or about the executives at any of the individual stocks we own. Maybe passive index dividend funds are really the best way to go.
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Re: 5 Long-term Stocks?
Old 02-10-2006, 12:28 PM   #16
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Re: 5 Long-term Stocks?

Dirty market timer I am, and you're more objective than many berkshire shareholders. I've seen those annual meetings. Those folks are buying the man, not the company.

But I guess we'll find out...
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Re: 5 Long-term Stocks?
Old 02-10-2006, 01:53 PM   #17
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Re: 5 Long-term Stocks?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
I've seen those annual meetings.* Those folks are buying the man, not the company.

But I guess we'll find out...
True-- those Yellow BRKs scare me a little.

My nightmare scenario is Buffett being attacked by a crazed shareholder, although I suspect we'll find out that his Omaha homestead holds a lot more than just a few spare annual reports & tax returns.
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Re: 5 Long-term Stocks?
Old 03-03-2006, 08:42 AM   #18
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Re: 5 Long-term Stocks?

Quote:
PAY - Verifone

Expensive but market leader and small enough to have a lot of growth ahead. Full disclosure - I own it.
OK, you guys are on your own at this point. I made you some 'Mad Money'
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Re: 5 Long-term Stocks?
Old 03-03-2006, 08:44 AM   #19
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Re: 5 Long-term Stocks?

Quote:
Originally Posted by wildcat
OK, you guys are on your own at this point.* I made you some 'Mad Money'
Did you sell?
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Re: 5 Long-term Stocks?
Old 03-03-2006, 08:46 AM   #20
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Re: 5 Long-term Stocks?

No, I am long-term and I got in quite a bit lower but I would not reco anyone get in now. Up close to 6% pre-market, that's way too hot for this cat...
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