If you’re a stock market investor, at one time or another you’ve struggled with a major quandary. Which stocks are right for your portfolio?
It’s a difficult question and one the pros grapple with on almost on a daily basis. But chances are you’re not a pro. Chances are you’re an individual investor who doesn’t have a masters in finance from Wharton.
And chances are you’re like millions of Americans who buy and then hold stocks for a fairly long period of time -- say 5 years. It seems many of us put money into stocks the same way we put money into a bank account -- we deposit it and then keep it there. No matter what.
Sound like you? Don’t be ashamed . It may not be the most aggressive stock market strategy but it’s hardly the worst either. The yearly return from stocks between 1900 to 2008 was 9.3%
So how should you invest?
If you’re a buy and hold kind of guy or gal, one of the best strategies may be something called value investing. That’s a fancy way of saying, focus on companies with strong balance sheets, poised to perform better than their rivals and currently trading at a discount to peers.
In theory you’d want to hold these value stocks for a long time because they should make significant gains as their value is realized over months and years.
So now we’ve got that part out of the way –back to the question at hand. Which stocks are right for your portfolio?
Should you look at technology stocks, betting that companies will invest in IT as the economy recovers? Or maybe you should look at bank stocks that were so badly beaten down by the recent sell-off? Or how about names you know such as Walmart or Target?
Or maybe all of the above? Sounds like a lot of research. In fact, it is.
Fortunately, CNBC’s Fast Money traders have done some of the leg work for you. They were asked to select their favorite stocks to buy and hold for the next 5 years.
Guy Adami likes Johnson & Johnson . “This stock shows very stable earnings growth helped in large part by JNJ’s decision to buy Pfizer’s consumer brands business a few years ago. As a result, not only do they have a nice pipeline of new drugs, the company has a diversified business model, Pharmaceutical, Medical Devices & Diagnostics, and Consumer Products. With fair valuations and a stable dividend, JNJ makes a great stock for the long term,” he says.
But we didn't just ask Guy Adami. We asked the entire crew.
Following are their picks with a short explanation of why they expect these stocks to perform. Whether they belong in your portfolio is entirely up to you.
> Click here to launch our Slow Money trades slideshow
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Trader disclosure: On October 2, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (C) Calls; Najarian Owns (FFIV) Call Spread; Najarian Owns (GE) Calls; Najarian Owns (JPM) And Is Short (JPM) Calls; Najarian Owns (INTC) And Is Short (INTC) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Calls; Najarian Owns (PEP) Call Spread; Najarian Owns (WFC) Put Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (CSCO), (MSFT), (USO); Finerma's Firm And Finerman Own (WFC) Preferred Shares; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (UNG); Finerman's Firm Owns (BDX); Finerman's Firm Is Short (TLT); Finerman's Firm Owns (BAC), (BAC) Calls, (BAC) Preferred; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm Owns (WMT); Finerman's Firm Is Short (XRT); Finerman's Firm Is Short (BWA); Finerman's Firm Is Short (USO); Seymour Owns (ABV); Seygem Asset Management Is Short (PBR); Seymour Owns (EWZ); Seygem Asset Management Owns Lukoil Shares
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