One of the secrets to Warren Buffett’s investing success is holding on to stocks for the long term. Though Buffett may have “missed out” on certain stocks that have soared overnight, he’s also avoided the major losses of some of the market’s former highfliers.
The chairman of Berkshire Hathaway has proven his strategy is one shareholders can count on to deliver excellent performance over the long term. Under his leadership, Berkshire Hathaway has generated a compounded annual gain of nearly 20% over 58 years, surpassing the S&P 500‘s 10% increase.
It’s no wonder investors closely watch Buffett’s every move. Here’s one move Buffett won’t be making any time soon: The billionaire investor says he doesn’t plan on selling shares of two longtime holdings this year. In his recent letter to shareholders, Buffett wrote that he plans on leaving his holdings in Coca-Cola (NYSE: KO) and American Express (NYSE: AXP) untouched.
Read below to find out why Buffett plans on maintaining his positions in these two companies and whether they should be on your buy list.
Image source: The Motley Fool.
A strong moat
Coca-Cola and American Express have become household names over the years. The former is the world’s biggest non-alcoholic beverage maker, selling its eponymous drink along with many others. The latter is a global leader in payment services. Both of these companies have grown earnings in the double digits over the past five years and, over time, have built something else Buffett likes: a solid moat, or competitive advantage.
Coca-Cola’s moat is its brand strength. It sells certain beverages (such as Coca-Cola) that people crave and generally won’t replace with an alternative. American Express’ moat is the rewards and security it offers card members. As they make purchases, they know they can easily receive reimbursement if items don’t arrive or are damaged, and American Express offers generous rewards for card users. For those reasons, card members remain loyal and are willing to pay for an American Express card every year.
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Over time, “both Coke and AMEX (American…
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