Investors use plenty of different approaches, but arguably no approach has ever been more successful than the buy-and-hold strategy employed by billionaire investor Warren Buffett at Berkshire Hathaway Inc.
Buffett's long-term approach with a focus on quality companies has made him one of the richest people in the world. While his level of wealth might be hard to replicate, his style can certainly be followed and outperforming the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is also achievable.
Perhaps the best news for investors who adopt a buy-and-hold strategy is the number of investors who don't! This is a key advantage. Here are four stocks to consider for a long-term portfolio.
Telstra Corporation Ltd (ASX: TLS) is the leading telecommunications company in Australia and that won't change in the next decade. While competitors will continue to snap at its heals, Telstra is the 'big dog' of the industry who can defend its position and continue to grow as its customers continue to demand more telco services.
Yes, BHP Billiton Limited (ASX: BHP) is exposed to commodity prices which adds an element of risk to the company but its diversity and particularly its low cost operations create a competitive advantage, or what Warren Buffett would call a moat around BHP. This cost competitive position will help BHP maintain its leadership position into the future.
Ramsay Health Care Limited (ASX: RHC) has been one of the top performing stocks over the past decade and with an outstanding portfolio of assets and the tailwind of an aging population, there are plenty of reasons to suspect Ramsay will be a top performing company over the next decade too.
The ASX Ltd (ASX: ASX) is highly leveraged off a fixed cost base. While in some years this can be a drag on earnings – as has been the case in recent years – it can also provide substantial upside. Over the next decade increased volumes, new issues and new business will all be conducted through the ASX's platforms with significant scope for much of this revenue to flow through to the bottom line.
