Choosing the best stocks to stick with  is getting tougher in a world of disruption, but these six sharemarket ideas may be a handy starting point.
Choosing the best stocks to stick with is getting tougher in a world of disruption, but these six sharemarket ideas may be a handy starting point.

Six stocks to hold for decades

Surging share prices in recent weeks rekindled interest in the stockmarket, but stomach-churning volatility is confusing people about what stocks to own.

Investor Warren Buffett, the world's fourth-richest person and worth more than $110 billion, has been famously quoted saying "our favourite holding period is forever".

But how do you choose forever stocks? Especially when "forever" is a dirty word among many analysts in an uncertain world, highlighted by today's sharp sell-offs in Australia and overseas.

CMC Markets chief market strategist Michael McCarthy said nothing was "100 per cent safe and guaranteed" and he couldn't recommend any stock to hold forever.

"The rate of disruption is accelerating so everything's vulnerable," he said.

Huge sharemarket volatility in recent days is another reason to think long-term. Photo: iStock
Huge sharemarket volatility in recent days is another reason to think long-term. Photo: iStock

However, some stocks are better suited than others to buy and hold for decades.

Catapult Wealth director Tony Catt said businesses that had reinvented themselves were an indication of stocks worth holding long-term.

"I would argue that's Wesfarmers, and to a lesser degree Woolworths," he said.

WESFARMERS

The conglomerate is over a century old with businesses spanning Bunnings, Kmart, Officeworks, flybuys, chemicals and fertilisers, financial services, tools and safety gear, timber and property trusts.

Baker Young Stockbrokers managed portfolio analyst Toby Grimm said Wesfarmers had been

"prepared to make significant company-transforming transactions".

CBA

Mr Grimm said he would pick a bank to buy and hold, and that would be the Commonwealth Bank.

"It has the track record, it's the biggest, and it has largest customer base and lowest-risk operating metrics," he said.

BHP

"BHP gives you diversified exposure to multiple commodities in long-life, low-cost assets - that's what you want in your bottom drawer," Mr Grimm said.

"Until they come up with a substitute for iron or and steel, and copper for communications and electrical networks, they're going to survive," he said.

AUSSIE SHARES ETF

ETFs, short for exchange traded funds, spread each dollar invested across all companies in a sharemarket index such as the ASX 200. It's instant diversification.

Popular ETFs are from iShares, Vanguard and State Street, and Catapult's Mr Catt suggested the BetaShares EX20 ETF, which held all of the top 200 Aussie stocks apart from the top 20. "I really like that because the top 20 are very narrow - banks, resources and retail companies," he said.

Six Park’s Ted Richards is a big fan of ETFs. Picture: David Geraghty/The Australian.
Six Park’s Ted Richards is a big fan of ETFs. Picture: David Geraghty/The Australian.

GLOBAL SHARES ETF

Most of the world's companies are based offshore, and global shares ETFs are on the ASX.

Robo-adviser Six Park's director of business development, Ted Richards, said he liked the Vanguard MSCI International Shares ETF, also called VGAD.

"It provides investors with exposure to more than 1500 companies across 22 of the world's major developed economies," he said.

"The benefit of VGAD is that it's currency hedged, so it's unaffected by currency fluctuations, and right now the Aussie dollar is experiencing a lot of volatility."

WOOLWORTHS

The supermarket giant's share price has increased seven-fold in the past two decades, even while battling the arrival of foreign retailers such as Aldi.

Analysts say it has the lowest-cost distribution network in Australia, which is a big positive.

Originally published as Six stocks to hold for decades


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