Got patience? Plenty of people like to think they’re committed to their holdings for the long haul. When things get dicey, though, a sizable swath of this crowd bails out of these investments.
That can be a big mistake, of course. Most people struggle to see the market’s true short-term highs and lows, meaning they get out (or in) at less than ideal times. Often, the best decision you can make is deciding to do nothing at all, taking your lumps on faith those beaten-down stocks will eventually recover.
With that as the backdrop, here’s a closer look at three long-term investments you can actually commit to for the long term. Each one is built not only to last, but to thrive no matter what the future has in store.
Sure, it’s technically a consumer tech name, and technology is generally prone to being made obsolete by, well, newer technologies. If there were ever a tech name shielded from the never-ending cycle of improved tech, though, it’s likely Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).
Think about it. While there was a time when consumers clearly functioned without either one, the internet and smartphones have become de facto centerpieces of our lives. Chances are, we’re not going to give them up now. And Alphabet is the powerhouse on both fronts, with Google fielding 92% of the world’s web searches (according to numbers from GlobalStats’ statcounter) and its Android mobile operating system installed on nearly 73% of the world’s mobile devices. In fact, when broadening this look to all consumer tech devices like notebooks and tablets, there are more Android-powered devices than there are machines running Microsoft Windows.
This reach of course positions Google as a gatekeeper to the world wide web, giving Alphabet a variety of ways to monetize all of its platforms.
And it’s done so quite well. The company’s year-over-year revenue comparison has fallen in only two quarters since 2006, and one of those quarters was the second quarter of last year when the COVID-19 pandemic was rapidly spreading. In fact, we’ve also only seen the company’s quarterly top line fall twice on a sequential basis — from the previous calendar quarter — for the same time frame, and again, one of those two instances was linked to COVID-19. It’s all due to consumers’ habitual reliance on Google and/or their Android devices.
2. Walt Disney
Entertainment giant Walt Disney (NYSE: DIS) is nowhere near as consistent as Alphabet when it comes to driving revenue; the pandemic was downright devastating to the company. Nevertheless, Disney is a long-term winner — not because it does one thing incredibly well, but because it can do a variety of things incredibly well when one piece of its business is struggling.
You likely know all about Disney’s theme parks and movies. You’ve also heard plenty of late about their streaming platform, Disney+. What you may not realize, however, is how minor those ventures are compared to the company’s other lower-profile operations.
Before COVID-19 rattled the world beginning in early 2020, television — Disney, ESPN, and ABC — collectively accounted for roughly one-third of Walt Disney’s revenue, parks and resorts along with licensed product sales made up another third of its top line, films were 16% of its business mix, and its direct-to-consumer and international arm (think Hulu and ESPN+) contributed 13% of its top line. With the pandemic still crimping some segments of the entertainment industry and after the launch of Disney+, direct-to-consumer alone now makes up nearly one-third of the company’s top line, while other divisions now contribute relatively less revenue.
But that’s the point. Walt Disney’s always got something to sell to someone; oftentimes it’s got several products and services to offer to the same consumers. It may not be completely recession-proof, but it’s certainly recession-resistant, and it’s also able to capture more than its fair share of growth stemming from a strong economy.
3. SPDR S&P 500 ETF Trust
Finally, add the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) to your list of long-term investments you’ll be glad you tucked away.
Unlike Walt Disney and Alphabet, owning an index-based fund isn’t an attempt to outperform the market. It’s just an attempt to match the market’s overall performance; in some ways it’s also an admission that, given enough time, you probably can’t beat the market.
Statistically speaking though, that’s not a bad bet.
Data from Standard & Poor’s tells the story, pointing out that measuring results from the end of the year 2000 and the end of 2020, around 94% of actively managed mutual funds available to U.S. investors didn’t perform as well as the S&P 500 Index (SNPINDEX: ^GSPC). The results are similarly bad when you look at shorter time frames.
Why can’t many of these professional fund managers do what they’re presumably trained and paid to do even when they’re giving it a full-time effort? Because timing trade entries and exits is hard to do well. That doesn’t prevent these folks from attempting it in their hunt for market-beating results, however.
It’s possible you could have better luck. In fact, the whole purpose of highlighting Alphabet and Walt Disney is that these two names have the potential to outpace the broad market’s gains.
Both of those individual stock picks still require long-term holding periods to make the most of their potential, though. So the best thing to do is likely to just leave them alone as long as you can, and round them out with an index-based ETF you can also truly commit to for the long haul.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. James Brumley owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Microsoft, and Walt Disney. The Motley Fool has a disclosure policy.