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May 28 2011

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A narcotics accusation, a cryogenic chamber and a single stock: Reloaded





Two years ago, I gave my readers a challenge: To pick a stock that they’d hold for the next 80 years.

This is how I presented it:

Your workplace is stormed by well-dressed officials who grab you, throw you into a car, and take you to an interrogation centre.

You’re part of a deeply rooted narcotics organization, they tell you—conducting its wholesale transactions in the bowels of Mexico’s Copper Canyon.

Despite being innocent, you know that somehow you’re doomed, because that slick, cool little red headed guy with the shades from CSI Miami is convinced you’re the one they’re looking for… and that you’ve killed a couple of his agents… and that you’ve slept with his girlfriend… so you’re screwed no matter what.

But one of the good-looking, 20 year old genius CSI dudes has built a cryogenic chamber set to freeze someone and automatically revive them 80 years into the future. And he wants to test it. Horatio (the red-headed guy) thinks this sounds like a good idea—because he figures that your chances of revival will be about as good as Walt Disney’s, and nobody really expects Walt to walk again.

“Hey!” you protest, “Even if this works, my family will be gone, my professional skills will be redundant in 2090, and I’ll have no way of making a living.”

Horatio leans forward. Slowly taking off his shades he says, “One stock. We’ll liquidate your bank accounts,” he smirks, “and put your money into one stock. If it goes bankrupt in the next 80 years, too bad. But if it makes even 8% a year for the next 80 years you’ll be rich if you survive. So what’s it going to be?”

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It was one of my most popular posts, and it was great to see so many people pick up the gauntlet and debate the issue.

More recently, John Heinzl, of the Globe and Mail, sent out a similar challenge. I was one of the “experts” he questioned, when recommending a single dividend paying stock for the next 100 years.

What kind of chump would I be, if I chose a different stock this year, to what I chose two years ago? Coca Cola was my pick then, and I’m sticking to it.

You can see John’s article here, published in the Globe and Mail, earlier this week: … read the article

But what about you?

What stock would you pick?

 

 





About the author

andrew hallam

I'm a freelance finance writer, lucky enough to have been nominated as a finalist for two Canadian National Publishing Awards. I'm also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a book explaining how I became a millionaire on a teacher's salary, while still in my 30s. Working to empower people financially, I'm available to motivate and inspire people on basic retirement planning and index investing. I'm happy to comment on your questions, first, please read the Terms of Use.

Permanent link to this article: http://andrewhallam.com/2011/05/a-narcotics-accusation-a-cryogenic-chamber-and-a-single-stock-reloaded/

8 comments

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  1. avatar
    The Passive Income E

    All great stocks being mentioned! I only own Enbridge (ENB) of all the stocks mentioned. I do like most of them but they are usually priced at a premium and I have found it hard to dive in …

    I'll just need to dive in one day. I was surprised to see JNJ missing from the list …

    1. avatar
      Andrew Hallam

      Sounds like a good one Passive. As for premiums, I guess it wouldn't matter much if you had 100 years to wait!

      Great to see that passive income of yours building.

      Readers, if you haven't checked out The Passive Income Earner's blog, you should have a look. He has a great way of determining the growing success of his portfolio.

  2. avatar
    The Dividend Ninja

    Andrew fun post!

    Yes I'm sure JNJ and Coca-Cola (as with most of the big US aristocrats) will still be around in 80 years :) It would be easy to pick those two. Sure you can get a coke in many countires, where you can't even get clean drinking water. I think that says something about Coke's global dominance. I'm sure McDonalds is much the same.

    I'm going for the Royal Bank of Canada (RY-T). At the end of the day, and even with the events of the 2008 and 2009 crisis, its US holdings,European debt crisis, etc. – banks still own the world. I think this stock will be here in 80 years and worth more than I paid for it. Canadian banks do have a habit of splitting their shares every few years :)

    1. avatar
      Andrew Hallam

      Hey Ninja,

      You and John Heinzl picked the same stock, for the same reasons. It's tough to imagine anyone knocking the Royal Bank off its lofty spot. Now for the tougher goal….trying to live another 100 years.

      Just saw a great photo of Jane Fonda the other day. Wow! You never know!

  3. avatar
    Kanwal Sarai - Simpl

    I'm with you Andrew….Coca-Cola all the way that's my pick too!

  4. avatar
    Dividend Monk

    I was thinking about writing an article asking roughly the same thing, and never got around to posting it. I even had my own answer picked out, but sadly, it's going to sound boring based on what you just said. Fortunately boring doesn't mean wrong.

    Coca Cola.

    Large and streamlined business, great margins and pricing power, powerful brand, huge international presence, tons of free cash flow, powerful compounding dividend growth, strong balance sheet, and most importantly, it's an easy business. There are tons of dividend aristocrats I could pick as well that meet most of these criteria, but Coke's business is so much simpler and more straightforward than almost any of them. It's not exactly at a deep value right now and never is, but if I had to go with one stock, I'd go with KO.

    1. avatar
      Andrew Hallam

      Those are all great reasons to go with Coca Cola!

      I think that you could likely build a portfolio of the stalwarts: Coca Cola, Colgate Palmolive, 3M, Royal Bank etc (heck, even add GE to the mix!) and if you held them for 100 years, with reinvested dividends, you'd do better than 98 percent (or more) of professionally managed funds, with multiple managers who try dancing in and out of stocks, changing investment "styles" over the years etc.

      Personally, I don't drink Coke, or any of its products (except the bottled water, while traveling) but I have to admit that Coke is likely unstoppable.

  5. avatar
    Charles Knell

    That so easy andrew, spy, and here is why: http://www.simplestockinvesting.com/SP500-histori

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