If Given the Option to Purchase and Maintain a Sole Stock Investment, This Would be My Choice
I've got a pile of shares, and spreadin' 'em out is crucial to me. I dig the concept of letting victors carry on and disappointments shrink down in my portfolio.
Yet, what if I was limited to purchasing and hanging onto a solitary stock? My first instinct would be to sink my cash into a holding company like Berkshire Hathaway as it possesses investments in various publicly traded corporations. However, if I needed to ditch those "ETF-like" stocks, the choice would become a tough nut to crack.
The stock criteria I follow
I scrutinize multiple aspects before snatching up a share. Points that typically catch my eye may be comparable to those of other investors – valuation, administration, performance, etc. Yet, there are two aspects that outshine the rest.
First off, I prefer investing in businesses with a robust barrier to entry. In medieval times, castles protected by vast moats helped keep intruders at bay. In a business context, a barrier to entry safeguards against competition.
Barriers to entry can manifest in diverse ways. Powerful ones that I particularly enjoy are network effects (a company's value escalates as it accumulates customers) and cost advantages.
Secondly, I hunt for shares of businesses with multiple avenues to development, or choice. This is essential as occasionally, a company with a lone growth path can encounter an obstacle. Companies with options can smoothly shift into unexplored territories to promote growth.
The best of both worlds
Numerous stocks boast robust barriers to entry and choices. Yet, my top pick at present is Amazon (AMZN – 4.60%).
I engage with Amazon's goods and services on a regular basis. I'm a bookworm relishing the company's Kindle e-reader and subscribing to Kindle Unlimited, which provides access to millions of books. My family frequently orders items via Amazon Prime and enjoys TV shows and films on Prime Video. We even have Echo devices incorporating Amazon's artificial intelligence (AI) assistant, Alexa.
Each individual subscribing to Amazon Prime or Kindle Unlimited magnifies Amazon's attractiveness to advertisers and publishers. Such a network effect makes Amazon more valuable – a genuine demonstration of this concept. The primary reason why my family often shops on Amazon is its affordability – a prime example of the company's cost-advantage moat.
I appreciate that Amazon continues to push the boundaries to further reduce costs. The company's focus on local product fulfillment near its end-users and innovation in automation, including the use of robots in fulfillment centers, is yielding results.
Amazon embodies the essence of choice. Originally, the company began as an online bookseller and then morphed into a comprehensive e-commerce platform. Next, the company shared its data infrastructure with external customers through Amazon Web Services (AWS), which now ranks as the world's largest cloud service provider. I anticipate AWS will continue to fuel impressive growth as businesses move their apps and data to the cloud, embracing AI's might.
Jeff Bezos, Amazon's founder and executive chairman of the board, once mentioned, "Your margin is my opportunity." This saying remains relevant given how Amazon has ventured into various industries, such as pharmacy and medical clinics.
The operative term
Is there anything about Amazon I dislike? Of course. I'd want its valuation to be less exorbitant. Still, history has proven that earnings-based valuation metrics hold less weight with Amazon than with most other stocks.
This brings me to the most essential term when considering Amazon as the lone stock I'd want to acquire and hold on to. The primordial word is "hold." Anyone who's invested in Amazon long-term has reaped massive rewards.
I can't guarantee that Amazon will deliver monumental gains over the next twelve months. However, I'm confident that if I invest in Amazon for the next ten years, I'll reap solid returns. The company's robust barrier to entry and varied growth paths should ensure it keeps winning.
Following the text, two sentences containing the words 'investing', 'finance', and 'money' are:
Engaging in finance and investing, I would prioritize purchasing shares of companies with robust barriers to entry and multiple growth paths, such as Amazon, to ensure sustainable returns on my money.
Given my preference for long-term investment strategies, I would allocate a significant portion of my finance portfolio to companies like Amazon, where investing money can lead to substantial returns due to their intrinsic value and multiple growth avenues.
