Buy and Hold Forever Stocks

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Runalong
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Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 7:18 pm

Those of you who generally subscribe to Bogle-osophy but also have one or more equity positions that you intend to hold onto "forever": which ones are they? I have two: BRK(b) and AAPL.

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steve roy
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Re: Buy and Hold Forever Stocks

Post by steve roy » Mon Feb 23, 2015 7:21 pm

Mine is an ETF of Vanguard's Total Stock Market.

I swore off individual stocks during the period '08-'09, for reasons you can probably conjure up in your head without prompting from me.

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InvestorNewb
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Re: Buy and Hold Forever Stocks

Post by InvestorNewb » Mon Feb 23, 2015 7:25 pm

I don't own any individual stocks.

- BRK.B will probably give similar returns to the S&P 500. Why not hold the S&P 500 instead? (Why take on the added risk?)

- As for Apple, what happens if iPhone loses its popularity?

I have no interest in buying individual stocks; I would rather own ~10,000 (which I already do).
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

grok87
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Re: Buy and Hold Forever Stocks

Post by grok87 » Mon Feb 23, 2015 7:27 pm

steve roy wrote:Mine is an ETF of Vanguard's Total Stock Market.

I swore off individual stocks during the period '08-'09, for reasons you can probably conjure up in your head without prompting from me.
+1
RIP Mr. Bogle.

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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 7:29 pm

I thought about adding: if this doesn't apply you don't need to answer but didn't think it necessary. Silly me.

Hopefully I won't get a variation of these same reply from EVERYBODY ON THIS FORUM who has sworn off individual stocks.

And yes, I understand your reasons but not all of us on this list are unexceptionable.

grok87
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Re: Buy and Hold Forever Stocks

Post by grok87 » Mon Feb 23, 2015 7:33 pm

Runalong wrote:Those of you who generally subscribe to Bogle-osophy but also have one or more equity positions that you intend to hold onto "forever": which ones are they? I have two: BRK(b) and AAPL.
in the late 60s, early 70s there was a similar idea, called "one-decision" stocks. the idea was that you only had to make "one-decision"- when to buy. you would never have to sell...
https://www.ifa.com/articles/One-Decisi ... es_Matter/

it didn't work out too well!
RIP Mr. Bogle.

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fourwedge
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Re: Buy and Hold Forever Stocks

Post by fourwedge » Mon Feb 23, 2015 7:34 pm

I don't see the reason to hold individual stocks (Why Risk it?). Those 2 are good but what about after Buffet is gone? Does that company still continue to out perform the market? Or do they make terrible mistakes while you are holding forever?

Apple can fall at the drop of a hat just like any stock. What make these 2 special? Is it different for them? I don't think so, I saw Apple drop from 750 to about 350...just like other stocks.
Max out your tax sheltered retirement accounts with inexpensive, well diversified, index funds and you will beat 90% of all investors.

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Re: Buy and Hold Forever Stocks

Post by knpstr » Mon Feb 23, 2015 7:41 pm

steve roy wrote: I swore off individual stocks during the period '08-'09, for reasons you can probably conjure up in your head without prompting from me.
Did they all fall substantially more than the indexes during that time? Looking back if you held would you be okay now?
InvestorNewb wrote: - BRK.B will probably give similar returns to the S&P 500. Why not hold the S&P 500 instead? (Why take on the added risk?)
Berkshire is about the Berkshire 500 anyway with how many companies it owns. :happy
grok87 wrote: it didn't work out too well!
"They were great companies that became known as "one-decision" stocks - stocks that you should buy, no matter how expensive, and hold forever."

I think I found the part where they screwed up.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Ged
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Re: Buy and Hold Forever Stocks

Post by Ged » Mon Feb 23, 2015 7:48 pm

Runalong wrote:Those of you who generally subscribe to Bogle-osophy but also have one or more equity positions that you intend to hold onto "forever": which ones are they? I have two: BRK(b) and AAPL.
I had a collection of dividend champions. P&G, Exxon, BP, IBM.

Over time I learned that no stock is invulnerable to the slings and arrows of outrageous fortune. I don't hold any individual stocks any more.
Last edited by Ged on Mon Feb 23, 2015 7:50 pm, edited 1 time in total.

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k66
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Re: Buy and Hold Forever Stocks

Post by k66 » Mon Feb 23, 2015 7:49 pm

Why bother picking? Most will not make the grade:

viewtopic.php?f=10&t=159022
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 8:27 pm

Should I be exasperated or just "LOL" as the kids say?

Is there a way to ask a question on this forum of those participants who perchance allow themselves some little exception or other to Generally Accepted Bogleheads Standards without getting inundated by the Holy Bogle Church's own self-appointed Guardians of Orthodoxy, constantly monitoring everything that appears on the forum with the express mission of stamping out any hint of incipient heresy as soon as it dares poke its head out of the ground?

I know what Bogle Fundamentalists believe and do. But sometimes I like to dabble around the edges of heresy and see what I find there.

Is there really no way for those of us who do allow some exception or other (while generally adhering to the overall philosophy) to discuss our exceptions without being told over and over how foolish we are for our doctrinal impurities?

Anyway, AAPL has a special place in my portfolio because, about a decade ago I looked at what was happening there and came to the conclusion that in a decade or so Apple would Rule the Universe and I sold almost everything else I had in my itty-bitty portfolio and invested it all in Apple. That's how I was able to retire much earlier than I expected. I've since sold off about 80% of my original pre-split purchase but will hold the remainder forever, and with their cash flow being as totally ridiculous as it is, that isn't only a sentimental decision. Berkshire-Hathaway should need no justification; together these two comprise about 5% of my total portfolio. Anyway, my "forever" is closer than 1/4 century than to 1/2 century so that allows for a bit of wild and crazy recklessness.

OK, I vented my exasperation, now I can just LOL as you guys continue to do what you always do. As you were, gentlemen.

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Re: Buy and Hold Forever Stocks

Post by Jerry55 » Mon Feb 23, 2015 8:31 pm

My first foray into individual stocks was in late 2008, early 2009, and was only in 2 stocks.

I've always been a Ford man, and Carl Icahn purchased Ford @ ~ $7.00/share but sold around $6.00 I decided to try it.
I had purchased just shy of 2,000 shares when it was between $4-5, but sold them all in late 2009 or early 2010 @ ~ $10/share.
That paid for half of my 2010 Ford Taurus Limited. :D

During that time, GE was going for between $10-14/share. I picked up 600 shares but those I've kept, because of the dividends.

Now GE, I plan to keep forever. GE is paying Div & Yield: 0.92 (3.70%),
but IMHO, since my cost was half of the current value, I feel I'm getting twice that yield. :beer
Last edited by Jerry55 on Mon Feb 23, 2015 8:33 pm, edited 1 time in total.
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Re: Buy and Hold Forever Stocks

Post by Toons » Mon Feb 23, 2015 8:32 pm

I hold Msft, Mcdonalds,WalMart,Coca-Cola,Disney,Dominion Resources,Praxair,and have owned all with the exception of Disney for over 20 years and my plans are to pass them on to the next generation. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Buy and Hold Forever Stocks

Post by happyisland » Mon Feb 23, 2015 8:48 pm

Runalong wrote:Should I be exasperated or just "LOL" as the kids say?

Is there a way to ask a question on this forum of those participants who perchance allow themselves some little exception or other to Generally Accepted Bogleheads Standards without getting inundated by the Holy Bogle Church's own self-appointed Guardians of Orthodoxy, constantly monitoring everything that appears on the forum with the express mission of stamping out any hint of incipient heresy as soon as it dares poke its head out of the ground?

I know what Bogle Fundamentalists believe and do. But sometimes I like to dabble around the edges of heresy and see what I find there.

Is there really no way for those of us who do allow some exception or other (while generally adhering to the overall philosophy) to discuss our exceptions without being told over and over how foolish we are for our doctrinal impurities?

Anyway, AAPL has a special place in my portfolio because, about a decade ago I looked at what was happening there and came to the conclusion that in a decade or so Apple would Rule the Universe and I sold almost everything else I had in my itty-bitty portfolio and invested it all in Apple. That's how I was able to retire much earlier than I expected. I've since sold off about 80% of my original pre-split purchase but will hold the remainder forever, and with their cash flow being as totally ridiculous as it is, that isn't only a sentimental decision. Berkshire-Hathaway should need no justification; together these two comprise about 5% of my total portfolio. Anyway, my "forever" is closer than 1/4 century than to 1/2 century so that allows for a bit of wild and crazy recklessness.

OK, I vented my exasperation, now I can just LOL as you guys continue to do what you always do. As you were, gentlemen.
What did you expect? The internet is filled with messageboards where people want to discuss their illogical stock investments. This is one of the few where people try not to commit "heresy" to well-established facts. :confused

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Re: Buy and Hold Forever Stocks

Post by nodenuff2 » Mon Feb 23, 2015 8:58 pm

I hold Brk-b because of the respect I have for Mr. Buffet . I hold C to remind me that I am no stock ( barely breaking even after 5 years)picker. Both are less than 2% of my.investments.
2014 No. 42 2015 No.342 2016 No. 6 2017 238 2018 no. 175 2019 no. 144 6 year average 157.83. Proves I am just an average investor.What do I know? "Good bless America land that I love..."

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Re: Buy and Hold Forever Stocks

Post by btenny » Mon Feb 23, 2015 8:59 pm

I hold a block of Exxon Mobil (XOM) and have held it for 30+ years, way before I became a Boglehead or even knew about mutual funds etc.. The stock has split 3-4 times over the years and way outpaced the SP500. That single stock paid my kids way through college and now pays me more in dividends annually than I paid for the stock originally. Selling now would mean big capital gains taxes so I plan to hold it forever and pass it to my heirs. Although right now owning oil stocks is not very good and has not been for 4 years or so.

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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 9:00 pm

I'm sorry happyisland, I missed it:

What is the well-established fact regarding individual investors who allocate 5% of their portfolios to a couple of high-conviction stock picks rather than putting it all in index funds?

(P.S.: the internet is lousy at communicating emotion. I'm writing these posts with a smile on my face even though I know they might come off as crotchety. The Bogleheads = Authoritative Religion metaphor is admittedly low-hanging fruit but it's still fun to play with).

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Re: Buy and Hold Forever Stocks

Post by Toons » Mon Feb 23, 2015 9:02 pm

btenny wrote:I hold a block of Exxon Mobil (XOM) and have held it for 30+ years, way before I became a Boglehead or even knew about mutual funds etc.. The stock has split 3-4 times over the years and way outpaced the SP500. That single stock paid my kids way through college and now pays me more in dividends annually than I paid for the stock originally. Selling now would mean big capital gains taxes so I plan to hold it forever and pass it to my heirs. Although right now owning oil stocks is not very good and has not been for 4 years or so.


:thumbsup
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Re: Buy and Hold Forever Stocks

Post by nedsaid » Mon Feb 23, 2015 9:02 pm

There is nothing wrong with owning individual stocks. I still do after having purchased my first stock in 1987 or 1988. My individual issues are about 15% of my retirement portfolio.

Having said that, buying and holding an index fund would be the better choice.

The problem is that nothing is forever. Not Eastman Kodak, not Digital Equipment Corporation, not Nortel. Industries die and companies go out of business. So if you own a portfolio of individual stocks, I would advise that you do at least minimal maintenance on it.

Buying and holding a portfolio of blue chip stocks for a very long time is a good strategy. But nothing is 100% foolproof. Even very good companies can eventually go bust. One might have to do the minimal weeding and pruning of a portfolio. As Peter Lynch said, trade your stocks and keep your spouse.

If you have a portfolio of individual stocks, you want a holding period of at least five years. I would like a holding period of forever but somehow the world keeps changing.
A fool and his money are good for business.

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Re: Buy and Hold Forever Stocks

Post by happyisland » Mon Feb 23, 2015 9:08 pm

Runalong wrote:I'm sorry happyisland, I missed it:

What is the well-established fact regarding individual investors who allocate 5% of their portfolios to a couple of high-conviction stock picks rather than putting it all in index funds?

(P.S.: the internet is lousy at communicating emotion. I'm writing these posts with a smile on my face even though I know they might come off as crotchety. The Bogleheads = Authoritative Religion metaphor is admittedly low-hanging fruit but it's still fun to play with).
I would submit that the burden of proof should be on the person making portfolio allocations not justified by logic or reason. You might want to refer to the wiki, as well as the copious BH threads on risk etc. If you don't understand or agree with the premises of BHism I don't quite get why you would choose bogleheads as a site for financial discussion of this kind...

And I don't intend any crotchetiness either - to each his own! :wink:

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Re: Buy and Hold Forever Stocks

Post by knpstr » Mon Feb 23, 2015 9:15 pm

nedsaid wrote:There is nothing wrong with owning individual stocks. I still do after having purchased my first stock in 1987 or 1988. My individual issues are about 15% of my retirement portfolio.

Having said that, buying and holding an index fund would be the better choice.

The problem is that nothing is forever. Not Eastman Kodak, not Digital Equipment Corporation, not Nortel. Industries die and companies go out of business. So if you own a portfolio of individual stocks, I would advise that you do at least minimal maintenance on it.

Buying and holding a portfolio of blue chip stocks for a very long time is a good strategy. But nothing is 100% foolproof. Even very good companies can eventually go bust. One might have to do the minimal weeding and pruning of a portfolio. As Peter Lynch said, trade your stocks and keep your spouse.

If you have a portfolio of individual stocks, you want a holding period of at least five years. I would like a holding period of forever but somehow the world keeps changing.
Is GE forever? :wink:
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

123
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Re: Buy and Hold Forever Stocks

Post by 123 » Mon Feb 23, 2015 9:19 pm

While some favor Apple I put it in the same category as Kodak and IBM. Once they were the leading technology companies in their fields but over time management sort of lost track of what was going on. It will happen to Apple one day. The true believers will see only some dips in price, the market will see a slide and act accordingly.

Past performance is not necessarily indicative of future results. That applies in lots of circumstances.
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Re: Buy and Hold Forever Stocks

Post by zaboomafoozarg » Mon Feb 23, 2015 9:21 pm

I'll hold my 1 share of BRK.B as long as it gets me the 8% Geico auto insurance premium discount.

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Re: Buy and Hold Forever Stocks

Post by nisiprius » Mon Feb 23, 2015 9:21 pm

Someone please propose a fair, objective test of the hypothesis:

"High-conviction stocks outperform the benchmark index of the category they belong to."
Last edited by nisiprius on Tue Feb 24, 2015 1:24 pm, edited 1 time in total.
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Mountain Man
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Re: Buy and Hold Forever Stocks

Post by Mountain Man » Mon Feb 23, 2015 9:30 pm

My kids picked these for their portfolios: WFC, NKE, HAS, AAPL, MSG, KING, UA, DIS, VIAB. They are all in their single digits for age so hopefully these companies will last another 100+ years.

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Re: Buy and Hold Forever Stocks

Post by wassabi » Mon Feb 23, 2015 9:35 pm

Runalong wrote:Should I be exasperated or just "LOL" as the kids say?

Is there a way to ask a question on this forum of those participants who perchance allow themselves some little exception or other to Generally Accepted Bogleheads Standards without getting inundated by the Holy Bogle Church's own self-appointed Guardians of Orthodoxy, constantly monitoring everything that appears on the forum with the express mission of stamping out any hint of incipient heresy as soon as it dares poke its head out of the ground?

I know what Bogle Fundamentalists believe and do. But sometimes I like to dabble around the edges of heresy and see what I find there.

Is there really no way for those of us who do allow some exception or other (while generally adhering to the overall philosophy) to discuss our exceptions without being told over and over how foolish we are for our doctrinal impurities?

Anyway, AAPL has a special place in my portfolio because, about a decade ago I looked at what was happening there and came to the conclusion that in a decade or so Apple would Rule the Universe and I sold almost everything else I had in my itty-bitty portfolio and invested it all in Apple. That's how I was able to retire much earlier than I expected. I've since sold off about 80% of my original pre-split purchase but will hold the remainder forever, and with their cash flow being as totally ridiculous as it is, that isn't only a sentimental decision. Berkshire-Hathaway should need no justification; together these two comprise about 5% of my total portfolio. Anyway, my "forever" is closer than 1/4 century than to 1/2 century so that allows for a bit of wild and crazy recklessness.

OK, I vented my exasperation, now I can just LOL as you guys continue to do what you always do. As you were, gentlemen.
Absolutely nothing wrong with having 5% of your portfolio in individual stocks. Even most Bogleheads agree. Congrats on the smart Apple play. I would like to have a few 'sentimental stocks' of my own, but just haven't found the right ones yet. I suppose they're sort of like lovers -- you have to have that special chemistry. Can't force the relationship.
At any rate, congrats my friend. :sharebeer

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Re: Buy and Hold Forever Stocks

Post by Purelife304 » Mon Feb 23, 2015 9:48 pm

zaboomafoozarg wrote:I'll hold my 1 share of BRK.B as long as it gets me the 8% Geico auto insurance premium discount.
Wow I had no idea that this was a thing

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Re: Buy and Hold Forever Stocks

Post by Texas Radio » Mon Feb 23, 2015 9:53 pm

Johnson & Johnson, Proctor & Gamble, Pepsi, Kimberly Clark, Colgate-Palmolive
A portfolio is like a bar of soap. The more you handle it the smaller it gets.

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Re: Buy and Hold Forever Stocks

Post by IPer » Mon Feb 23, 2015 10:03 pm

The problem with individual stocks is when to sell them. There are no forever stocks, you must watch
them all. You must subscribe to market noise and make sure none of your holdings are having *events*
like some others (Enron and so forth) did in the past. I still have a large individual stock portfolio, I love
and hate it. I would sell most of it except I don't want to realize gains and pay taxes. It is a mess, I don't
advise it! The more I think about it I wish they were all Target Funds and/or Admiral shares in the same
allocation.
Read the Wiki Wiki !

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Re: Buy and Hold Forever Stocks

Post by Sagenick48 » Mon Feb 23, 2015 10:26 pm

I too own individual stock and can't sell them due to tax issues, let's see, capital gains at 20%, ACA tax at 3.8%, state income tax at 9.85%, Amt, Pease phaseouts ---

Still if you watched Forrest Gump, and Jobs, you know that even AAPL has gone up, and down and up again. And some companies, have been going down for a long time. My dad worked for US Steel. What if you had put all your $$ in that 50 years ago? JP Morgan got out at the right time.

THERE ARE NO FOREVER STOCKS, and maybe there are no forever indices, and no forever asset allocations.
The market goes up, the market goes down.

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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 10:30 pm

happyisland: As I said before, I agree in general with the premises of BH's, but I'm not a purist. If everyone on this forum was a purist there wouldn't be much of anything to talk about, would there?

nisiprius: at 5% of my portfolio, AAPL and BRK.B work just fine for me if they greatly outperform, slightly outperform, match or even slightly underperform VTI. Only if they greatly under-perform would I have any regrets. And the problem with your challenge is that you set it up so it isn't a fair fight. As far as I've been able to discern, your position is unfalsifiable, there is no way in our lifetime for anyone to prove you wrong: If AAPL & BRK outperform over the next decade it's random and if they underperform I was wrong.

123: Kodak is far from typical but yes it can happen. And you could probably cherry pick an exception but over most long time periods IBM would have outperformed an index fund. I only looked up one, going back exactly 20 years and it was about 10-fold vs about 6-fold, respectively. That's kind of irrelevant but what IS relevant is that according to Jeremy Siegel you would have done a lot better buying and holding the 500 stocks that made up the S&P 50 years ago rather than an S&P Index (the S&P 500 changes components frequently). Which means that the average stock in the index 50 years ago has vastly outperformed the index itself: http://www.usatoday.com/story/money/201 ... /23747543/

wassabi: thanks!

texas radio: BRK.B is almost equivalent to holding the 5 stocks you mentioned with the difference that I let them determine if and when it's time to dump any of them. they don't always get it right but they have access to information I can't get.

re: numerous comments- I agree that one can't buy and forget any individual stock, which is why I always put "forever" in quotation marks. The only stock I ever held forever was WorldCom, back when I was a neophyte. I had no idea "forever" would be over so quickly. But it was a small price to pay for an education.

re: tax issues: all of my holdings are in IRA or 403b accounts.

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Re: Buy and Hold Forever Stocks

Post by IPer » Mon Feb 23, 2015 10:31 pm

Sagenick48 wrote:I too own individual stock and can't sell them due to tax issues, let's see, capital gains at 20%, ACA tax at 3.8%, state income tax at 9.85%, Amt, Pease phaseouts ---

Still if you watched Forrest Gump, and Jobs, you know that even AAPL has gone up, and down and up again. And some companies, have been going down for a long time. My dad worked for US Steel. What if you had put all your $$ in that 50 years ago? JP Morgan got out at the right time.

THERE ARE NO FOREVER STOCKS, and maybe there are no forever indices, and no forever asset allocations.
yes! but is there a forever?! :)
Read the Wiki Wiki !

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Re: Buy and Hold Forever Stocks

Post by IPer » Mon Feb 23, 2015 10:41 pm

In all fairness, however, and I allocated a *double* position in BRK.B some time ago, now that position is more like a single full position due
to the rest of the portfolio size. If any one of my individual stock holdings disappears overnight it will not cause my portfolio to suffer. My
largest individual holdings are all sub 1%. So even if I checked out of the market noise, stopped watching my holdings I believe everything
will be fine. Those that put 4-5% in each might be ok...at least for a while but that would personally make me a bit too nervous, each to
their own.

And yes, I define a full position in my current portfolio as a bit less than 1%.
Last edited by IPer on Mon Feb 23, 2015 10:42 pm, edited 1 time in total.
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Re: Buy and Hold Forever Stocks

Post by IMD801 » Mon Feb 23, 2015 10:42 pm

0.2% of my portfolio is Tesla stock, bought somewhat cheaply. That's about all I can muster for buying individual stocks.

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Re: Buy and Hold Forever Stocks

Post by IPer » Mon Feb 23, 2015 10:46 pm

Oh! I just checked and SIRI, which I purchased for around $0.20/share, is the second largest position and a bit over 1%, and
I sold the cost on it 2 months after I purchased it in 2009, so I consider that a free position in my portfolio, a 1439% gain that
I am not anxious to realize!
Read the Wiki Wiki !

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Re: Buy and Hold Forever Stocks

Post by navyasw02 » Mon Feb 23, 2015 10:55 pm

I dont see anything wrong with having a lot of individual stocks. I have 30+ stocks right now in my Roth and taxable accounts and I pick based on a buy and hold strategy and have them roughly equally weighted. If one company goes belly up completely I've only lost 1/30th of my portfolio. Big deal. I enjoy learning and doing this as a hobby, picking index funds is boring to me and I can have total control and diversify as I choose.

OP, back to your original question - start with S&P aristocrats and then expand from there.

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Re: Buy and Hold Forever Stocks

Post by zaboomafoozarg » Mon Feb 23, 2015 10:56 pm

Purelife304 wrote:
zaboomafoozarg wrote:I'll hold my 1 share of BRK.B as long as it gets me the 8% Geico auto insurance premium discount.
Wow I had no idea that this was a thing
Yep! I just had to call them and ask for the Berkshire Hathaway shareholder discount. It doesn't stack with some discounts if you already have them, but luckily it worked for me. It's already saved me well over the $100 I paid for the share a few years ago.

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Re: Buy and Hold Forever Stocks

Post by Jerry55 » Mon Feb 23, 2015 10:58 pm

knpstr wrote:Is GE forever? :wink:
Good question. However, I believe in GE more than I do in Enron or Worldcomm. :oops:
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!

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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 11:07 pm

GE is actually the company I was thinking about when I wrote this post but I'll probably end up putting the money in VSEQX instead.

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Re: Buy and Hold Forever Stocks

Post by TradingPlaces » Mon Feb 23, 2015 11:30 pm

I have to ask:

- what is your exit strategy?

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Re: Buy and Hold Forever Stocks

Post by surfer1 » Mon Feb 23, 2015 11:31 pm

Purelife304 wrote:
zaboomafoozarg wrote:I'll hold my 1 share of BRK.B as long as it gets me the 8% Geico auto insurance premium discount.
Wow I had no idea that this was a thing
Apparently, you can also get the discount for being a member of PenFed (if you joined the National Military Family Association as part of signing up). Have to try this.

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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Mon Feb 23, 2015 11:56 pm

TradingPlaces- my exit strategy is hopefully die at a ripe old age and let my family sort it out.

Under what circumstances would I exit AAPL or BRK.B before that? I'm not sure, like I said it's only 5% and, truth is, I've already exited 80% of my original AAPL purchase as I was getting close to my goals and wasn't sufficiently diversified for my new circumstances. At this point I think AAPL will prove to be the cream of the dividend-paying crop, I just don't see how VDIGX (for example) can hope to match it at anytime in the next decade or more. If cash flow starts to recede to something more average then I suppose VDIGX would make more sense. BRK depends more on how it handles the transition, there is potential for them to do make any number of moves that could unlock shareholder value and since Buffett himself has been fairly average the past 10 years I don't expect any big decline when he dies or steps down but if I'm wrong it's a small enough allocation that it's not a big deal. It's not a burden and the risk/reward ratio suits me fine.

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Re: Buy and Hold Forever Stocks

Post by hmw » Tue Feb 24, 2015 1:25 am

I hold between 10 to 15 individual stocks, including a large position in AAPL, which has doubled since I bought it about 2 years ago. I don't think AAPL is a buy and hold forever stock. Technology company generally isn't. Remember Blackberry? I will sell AAPL and take the capital gain hit. The difficult question is when after the recent run up.

I also have BRK.B in my portfolio. It has also accumulated significant capital gains in my taxable account, I am more comfortable holding it forever.

Most of my new money are going into index funds. I don't have to worry about when to sell.

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Re: Buy and Hold Forever Stocks

Post by heartandsoul » Tue Feb 24, 2015 3:26 am

nisiprius wrote:Someone please propose a fair, objective test of the hypothesis:

"High-conviction stocks outperform their the benchmark index of the category they belong to."
Not sure about 'high conviction stocks' but there is plenty of evidence (Wiki 'individual stock portfolio' links, studies of Dimson etc) to suggest that an equal weighted portfolio of stocks is likely to outperform an index fund. Even the argument made by Nedsaid and others, that individual stocks positions need monitoring as the economy changes and companies die, is not backed by data. Indeed this study of the original Dow 30 components suggests capital has a way of not only surviving but prospering if left alone;

http://www.moneyweb.co.za/moneyweb-soap ... -30-stocks

Once again equal weight on purchase proved the best performing strategy.

There are two clearly different strategies when talking about holding individual stocks and it all comes down to the number of stocks held.

1. Few stocks held or traded with the aim of selecting winners to beat one or more benchmarks.

2. Many (at least 50) stocks held in the belief that this is a better long-term strategy than indexation.

The first has very little evidence to support it and is basically a gamble. The second is supported by evidence and is IMO a perfectly sound strategy.

I appreciate the OP was most likely talking about holding only a few stocks but it is important not to extrapolate from the risks of that strategy to the position that indexation is necessarily best which seems to be the prevalent view on here. Especially when that view is not supported by the data.
'Life is a strange thing. Just when you think you learned how to use it. It's gone' SS

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Re: Buy and Hold Forever Stocks

Post by heartandsoul » Tue Feb 24, 2015 4:24 am

I missed this post by pkcrafter which also supports the thesis that buying and holding individual stocks can beat the index;

http://www.fool.com/investing/general/2 ... he-sp.aspx

The actual study;

http://www.google.co.uk/search?q=Prof.+ ... &oq=&gs_l=

Holding all 500 of the original stocks in the S&P 500 is obviously a bit different to holding a subset of them but it is further evidence that one does not need to switch in and out of companies or hold an index fund to preserve and grow capital.

It's not clear whether the original 500 were equal or cap-weighted on purchase. If anyone knows then please share.
'Life is a strange thing. Just when you think you learned how to use it. It's gone' SS

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Re: Buy and Hold Forever Stocks

Post by SpaceCommander » Tue Feb 24, 2015 6:16 am

In reply to the OP: a "hold forever" stock is tough to identify because things change. However, a "wide moat" stock is one that can be reasonably expected to earn returns in excess of its cost of capital for the next 20 years. That's "forever" enough for me. Fortunately, Morningstar makes it easy to identify such stocks by labeling "wide moat" stocks according to their analysis. So there's your pool of candidates. Now you don't buy without regard to valuation, that would be foolish. I would suggest identifying those wide moat names that are beaten down in price and look to pick them up cheap. Given that approach, Exxon would look to be an ideal candidate right now (contra the advice of another contributor above). You want a wide moat company currently out of favor. If I were looking for a "hold forever" stock, that's how I would do it. Now think again whether or not you want to do this. A good alternative might be to simply own the total market and go fishing instead. It's your choice.
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Runalong
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Re: Buy and Hold Forever Stocks

Post by Runalong » Tue Feb 24, 2015 9:34 am

Over its three-year lifespan (so far), Morningstar's MOAT etf has fallen short of the index (VTI).

I wouldn't be surprised to see MOAT outperform in bear markets but I suspect that the wide-moat argument is well-enough known that it has already been priced in. OTOH, AAPL is certainly a wide-moat stock from my perspective (I'm not sure how Morningstar classifies it). I think AAPL keeps getting under-appreciated because no company in history has ever done as well as it has been doing and it's natural to want to believe that they can't keep it up: AAPL's market cap now exceeds that of the entire S&P 600 (small cap) and is twice that of the second biggest company (XOM). I think I read that they earned more last quarter than 450 of the S&P 500 COMBINED!

But nowadays I'm holding onto my remaining AAPL shares not as a growth stock but as a dividend juggernaut.

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Re: Buy and Hold Forever Stocks

Post by HongKonger » Tue Feb 24, 2015 10:31 am

I know buying individual stocks is gambling ...so I bought casinos.

Wynn Macau and Las Vegas Sands Macau - purchased at IPO with the plan to hold forever. Currently equal to about 4% of my equities.

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Re: Buy and Hold Forever Stocks

Post by parsi1 » Tue Feb 24, 2015 11:26 am

steve roy wrote: I swore off individual stocks during the period '08-'09, for reasons you can probably conjure up in your head without prompting from me.
++1
I gave up on trading individual stocks during the 2000 to 2002 tech bubble. Now all I have is 401K and Roth that I try to max out every year.
Why not buy and hold and index forever? depending on your preference/interest, S&P500, small Cap, Nasdaq, Value, real estate.....

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Re: Buy and Hold Forever Stocks

Post by jay22 » Tue Feb 24, 2015 12:09 pm

Good for you, guys, if this has worked out for you well! I see no reason to subscribe with the BH philosophy (even though my portfolio is 100% in sync with it apart from my 401 with sucky options) if you're willing to take the risk.

Now, which stocks will you recommend to buy and hold today - that is the question. ;)

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