Getting started as an investor can be a bit intimidating. Everything moves quickly these days, and so many people seem to have a better understanding of how things work. It’s easy to justify staying on the sidelines.
Don’t let all the noise deter you, though. Much of what you’re hearing is just that: noise that doesn’t entirely matter. A little common sense and patience can go a long way, and it’s completely possible to earn while you learn.
To this end, here’s a rundown of three good stocks that even the most inexperienced of investors can step into and keep tabs on. Their businesses (or goals) are simple, and their success is clearly defined.
1. Procter & Gamble
You’ve heard of the name. You probably even know that Procter & Gamble (NYSE: PG) makes a bunch of the goods we know and buy over and over again, often without a second thought. What you may not realize, however, is just how deep and wide this company’s reach is. P&G is the name behind Pampers diapers, Tide laundry detergent, Bounty paper towels, Gillette razors, Crest toothpaste, Pepto-Bismol, and more.
Nobody can argue that these product lines are exciting, or that they market themselves. Procter & Gamble must still promote these brands cost-effectively, and as the biggest name in consumer goods for a long, long time, it has perfected the art of connecting with consumers.
It also enjoys one of the world’s biggest marketing budgets, allowing it to buy its way into consumers’ hearts and minds. Last fiscal year’s promotional spending was a whopping $11.5 billion, according to Ad Age, and this year’s is looking on par with that figure.
The upside for novice investors is the straightforward way the business works. Procter & Gamble must pay the costs of manufacturing its goods, and must sell those products at prices above that cost while staying price-competitive. Soaring inflation is making this tougher than usual right now. But you don’t have to worry about any surprises with input costs and pricing power changing from one quarter to the next.
2. Walt Disney
Like Procter & Gamble, Walt Disney (NYSE: DIS) is a household name. Unlike P&G, though, Disney’s business mix isn’t so straightforward. Movies, theme parks, television (cable as well as network broadcast), licensing, and streaming are all in its wheelhouse.
Some of these lines bolster one another, but some potentially cannibalize others. The availability of new releases via the Disney+ platform, for instance, may have attracted new users to the streaming service, but may have also kept people out of theaters. And the film business is hit-and-miss with turning a profit, while theme parks are highly vulnerable to economic ebbs and flows.
Nevertheless, this is a company with a long history of success, even with the occasional headwind.
That’s ultimately the result of a well-loved brand name and a brilliant branding effort. Its film franchises like Marvel’s Avengers or Star Wars or Frozen feature well-conceived, splashy stories that are brought to life in its parks as well as in high-quality licensed toys.
These proven film franchises are being extended and expanded at Disney+, with episodic series like The Mandalorian or Loki. While the company manages a bunch of seemingly disparate divisions, most of them actually work together quite well. No other name is in position to do this as well as Disney does.
More to the point, no other company is in a position to pump up its revenue from 2010’s $38 billion to last fiscal year’s $65 billion, as Walt Disney has.
3. SPDR S&P 500 ETF Trust
Finally, if you’re a newbie, rather than trying to pick just a few of the market’s top stocks at the right time, plug into the overall market with an instrument like the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).
Just as the name suggests, a stake in this exchange-traded fund is 500 small pieces of all the stocks that make up the S&P 500. The catch: You can only buy and sell this basket in its entirety. That’s arguably a good thing. As veteran traders can attest, beating the market is tough to do.
It’s so tough, in fact, that not even most professional stock pickers can do it. Standard & Poor’s reports that between 2010 and 2020, 77% of large-cap mutual funds underperformed the S&P 500. The reason is simple but scary: The things that even the professionals do in an effort to outperform the market will more often than not hurt more than they help. In the same vein, investors who are content to just ride the broad market’s long-term bullish wave without getting out in front of it usually outperform their peers.
But you’ve still got an itch to pick individual stocks? Try this reasonable compromise: Make an index fund like the SPDR S&P 500 ETF Trust the bulk of your portfolio, and add individual names around that core long-term holding.
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