If you pick a good company, you can do it with one. Pretty easily. I own COST. I just ran the comparison. At 5 years COST is slaughtering the S&P. If I do “max”, it’s even more dramatic.
https://www.google.com/search?q=cost%20vs%20S%26P500#wptab=s…
It’s not a barn-burner, rocket to the moon. It’s just a juggernaut. Pretty consistently beating market year after year. After a while, it becomes a very substantial beat. It’s not sexy. It doesn’t match some investors’ returns (e.g TMF’s Saul). But quality wins out.
(Apologies that this link doesn’t go to the comparison, it just goes to the S&P…but you can enter “COST”, and select “5 yr”, and see for yourself.)
I’ve owned COST for at least a decade now. I’m not advising a strategy of putting all your money in one stock (I don’t do that either). Just making the point that identifying a quality company and letting it ride will outperform most fund managers most of the time.
In fact, it was after I read a Peter Lynch book that I bought COST. Lynch said that you should visit the business if you can. Well, I was a Costco member. So I paid attention to the business instead of my shopping list for one visit. The parking lot was jammed. It was a huge lot, and people were cruising trying to grab a space as others were leaving. The oversized carts of the shoppers leaving the store were overflowing. The huge warehouse was jammed with carts as people picked up everything from big screens to toilet paper. All the registers were open, and there were lines four or five deep on every one of them. So I looked up their 10K and 10Q, saw the numbers, and bought stock.
So that is my advice. Look at the business. Look at the numbers. Don’t let short-terms swings scare you. Don’t try to hit a home run. Invest in quality, and 20 years later you’ll be happy you did. Not necessarily COST. That’s just my example of what I did. I can’t know what the future holds for COST, but so far their numbers have not moved me to sell a single share. I’m sure there are many more companies out there like that. If I were a coffee drinker I probably would have gotten into SBUX when my broker recommended** it (back in '94, I think). But I wasn’t, so I never really “saw” the traffic at the stores, and never bothered beyond that. I’d be up A LOT if I had bought in '94.
And, no, that advice isn’t original. I got that from guys like Peter Lynch.
1poorguy (now “dabbles” in some more speculative stuff, and has a portion of his portfolio in “Saul stocks”; but most of his port is still in boring quality)
**The broker my company used for ESPP had a habit of sending out messages with some “analysis” recommending companies. I didn’t have a person that was “my broker”, it was just the brokerage house my company used. I later opened up my own brokerage account at a discount broker, and only used the other account for ESPP (since I had no choice in that).