(Value Investing Legend Walter Schloss Digesting Some Tasty Applesauce)
I don’t talk much about long-term investing, but I do manage longer-term investments (holding period of at least 12-18 months) for members of my family. I look for great, reliable firms that usually pay a handsome dividend. Regarding stop losses, I have price levels in mind where I am willing to admit my thesis is wrong, but they vary greatly and are much wider than in names I trade (a topic for another post–not within the scope of this post for discussion).
I also believe that you would be remiss not to conduct some form of technical analysis before allocating capital into any position. Shunning price action because you are a fundamentalist and/or you think “the market is stupid,” is akin to going to college to study creative writing and refusing to study and flunking your required Chemistry class because you say, “I’m not a scientist.” In other words, it is pure ignorance. A little bit of due diligence looking for a relatively healthy chart–even for a value investment–will go a long way. As an example, consider that PG went from $75 down to $43 during the 2008-2009 bear market. Thus, blindly buying and holding, even quality firms, is textbook laziness.
As a bull market matures, there will be inevitable rotations. Eventually, the large cap, “safe” stocks see inflows just as the market starts to realize that perhaps CMG won’t be overtaking XOM‘s market capitalization anytime soon. That process could take anywhere from a few months to a few years. Regardless, it will happen; Hence, the phrase “long-term investment.” Below, you will see five investing ideas of firms that are defensive in nature. I believe all five are in good shape technically, and will still be conducting business at least five decades from now. If you are looking for entry points for your long-term portfolios, I hope these ideas help.
(Disclosure: I have bought all five of these issues listed below for members of my family)