The decade from 2010 to 2020 has come with far less turbulence so far than the prior decade. Many investors might have grown to think all over again that they can just buy stocks and let it ride. After all, every single pullback has been bought heavily since 2012. Those trends cannot last forever, but getting past the noise and maybe even beyond the next recession and bear market is what long-term investors have to consider — maybe even out a full decade.
It was back in November of 2010 when 24/7 Wall St. first issued a list of stocks for true long-term investors: the Ten Stocks to Own for the Next Decade. Amazingly, the average gain of the 10 stocks had outperformed the broader Dow Jones Industrial Average (DJIA) and S&P 500 market indexes as of May 2015 with an average gain of 98% since November 10, 2010, without considering taxes on dividends and reinvestment costs. This was even a larger surprise, considering that the list outperformed the market without including Apple Inc. (NASDAQ: AAPL), which was still in a state of flux, paid no dividend and was not expected at the time to get into the dividend game for years. This list included some great wins and some unimpressive gains, considering the bull market strength.
Now that we are in mid-2015, we are nearing the half-way point of the decade cycle. 2015 is also widely expected to finally commence an interest rate hike cycle. 24/7 Wall St. has also said that investors should not panic at all about the coming Fed rate hike cycle. Still, even long-term investors need to assess their portfolios from time to time.
Picking stocks for a decade is no easy task. It seems like a small lifetime in some cases. Most decades witness one or two recessions and one or two bear markets. That means that long-term investors have to think like a futurist and look through the next business cycle. They have to pick where they want to be and, perhaps even more importantly, they have to identify where they do not want to be.
When 24/7 Wall St. identified its stocks for a decade, it considered loads of economic and consumer data, business spending, what interest rates will do, what election cycles might bring, and potential changes in regulation and taxation. The stocks for a decade was not at all meant to identify the next 10-bagger. While it outperformed the major indexes on average, this list was not designed to try to outperform any meg-bull market. The idea was to pick steady-eddy companies that were not considered high-growth stocks. This ranged from utilities to services, to select retail and consumer trends, and to business spending, and it included one technology stock.
The 24/7 Wall St. stock list will change only modestly, with perhaps one or two real changes, but with many alternative companies named specifically. American Electric Power (NYSE: AEP) and American Water Works Company Inc. (NYSE: AWK) are in, along with the garbage stock Republic Services Inc. (NYSE: RSG). Cisco Systems Inc. (NASDAQ: CSCO) is the sole technology stock, and the secular trend behind Dollar General Corp. (NYSE: DG) does not seem over at all. In energy, Exxon Mobil Corp. (NYSE: XOM) remains the top pick if you have to consider a decade out. Kimberly-Clark Corp. (NYSE: KMB) remains in consumer products, General Electric Co. (NYSE: GE) in conglomerates and Walt Disney Co. (NYSE: DIS) in media and entertainment. Teva Pharmaceuticals Industries Ltd. (NASDAQ: TEVA) is the one that really felt like the mistake, but alternative health care picks have been provided.
Again, alternative companies have been provided that will fit the bill for an outlook in the next five years to 10 years. No hyper-growth companies are included, and we would be surprised yet again if this list outperforms the S&P 500 and DJIA if a runaway bull market remains in place.