Apple And 7 Other Sit-On-Your-Hands Stocks


uncaptionedWhat is the most common investor mistake? Trading--getting in and getting out at all the wrong times, for all the wrong reasons. You've heard it before: Most investors are their own worst enemies. My dad taught me this investing axiom at an early age. In fact, Dalbar Inc. documented it recently in a report available online called "Quantitative Analysis of Investor Behavior, 2012." Google it, and you'll see evidence from a 20-year study.

Most mutual fund buyers, for example, badly lag the very funds they buy (and sell) because of bad timing. The average mutual fund holding period for equity or fixed income is only about three years. It's too short. Moreover, in the last two decades, stupid switching into and out of funds has cost equity fund holders more than four percentage points in annualized returns and bondholders even more--nearly six percentage points.

The solution, of course, is to trade less. Buy into good, well-researched companies and then wait. Let's call it a sit-on-your-hands investment strategy. Here are hand-sitters for consideration.


Apple (AAPL, 461) is no longer beyond criticism. I like that. The world's largest stock, it has a P/E of ten and sells for 3.3 times book value and 7.4 times cash flow. Its dividend yield is 1.8%. It's a bargain among megacap tech stocks like IBM, Google, Oracle and Microsoft, and it's a bargain among megacap consumer stocks like , Comcast , Disney and Nestle. Use Wall Street's hypercritical mood toward Apple as a buying opportunity.

Another big company worth buying is Visa (V, 160). It's in financial services and consumer services. It is also a strong technology play. Visa accounts for nearly half of the world's credit- and debit-card market. Think of it as a highly skilled funds-transfer firm with a giant global brand. Buy this stock and you can't help but "follow the money" around the globe. It's not cheap on fundamentals (it sells for a P/E of 50) but is definitely a buy-and-hold candidate.

Inditex (IDEXY, 26) is an enigma. Its $88 billion in market capitalization is Spain's largest, but it is a little-known giant. It happens to be the world's biggest fashion group, and its founder, Amancio Ortega, is No. 3 among global billionaires. You're most likely to know its Zara clothing store chain, but Inditex boasts many other thriving brands. Far from cheap at 27 times trailing earnings, it's likely to become a darling of this bull market's later stages as folks discover a new love.

Troubled Spain is also home to one of my other favorite megacap stocks, Banco Santander (SAN, 7.3). Earnings are depressed, but they'll bounce back. At 1.1 times annual revenue I bet it earns a dollar a share in 2014 and generates more than 8% in dividend yield.




Money manager Ken Fisher's latest book is Markets Never Forget (But People Do) (John Wiley, 2011). Visit his home page at
