Holding a stock forever seems unimaginable in a world where holding periods are getting shorter and shorter. But as Foolish investors who take a long-term view of investing, we should go into investments with the idea that we're never going to sell a stock. Sometimes the investment thesis changes or our financial needs change, but "forever" is a great holding period to aim for.
Few companies have the brand loyalty and product stickiness of Apple. The company's iPhone is arguably the most successful product of all time, and today it's just the start of the company's ecosystem. iPhone owners are drawn to other Apple hardware like Macs, iPads, AirPods, and Apple TVs that share services and content seamlessly. And that ecosystem has created one of the most financially successful companies of all time.
So why is Apple a stock I'll hold forever? One reason is that it now has $79 billion of net cash, with tens of billions more coming in each year. That creates a formidable financial foundation, but ultimately the company's long-term advantage comes down to its products.
Apple products are now central to the lives of hundreds of millions of consumers. And even as technology habits change, there are few companies as well-positioned to create the products of the future. Apple has defined the last decade, and given how few companies can scale to match its product development prowess, this is a tech stock that will be on top for a long time.
Financial transactions are increasingly being made with non-cash payment methods, and that's Visa's central business. Visa is a credit card company at its core, but today it's also a transaction network that's central to our financial lives.
What's been amazing about the last few years is how durable Visa's business has been. Companies like Square, Apple, and PayPal have come out with quick payment methods that could have avoided traditional credit cards, but they haven't gone that route -- outside of direct payments to other individuals, they're still dependent on Visa to make their payment methods work. Disruption will apparently be harder to pull off than tech giants had hoped.
Visa's biggest advantage is its network of users. When businesses are evaluating what kind of payments to take, they need to consider a lot of factors -- but what customers will be carrying should be front and center. And Visa cards are commonplace, creating a network that will be central to the economy for years to come.
No company has been able to blend the worlds of old media and new media like Disney. The company owns two of the top four streaming services by subscribers (Disney+ and Hulu), and has arguably the best content library in the world. On top of that, it has a theme park business that was humming pre-COVID, and television network operations that continues to churn out cash.
I like to compare the Disney business model to a multi-level waterfall, allowing the company to feed in great content to make money over and over again. A move like Frozen can start in theaters, then move to streaming, then inspire a theme park ride, among just a few of its value-creating touchpoints. And with studios like Marvel, Pixar, Lucasfilm, and Disney Studios, the company puts amazing content into the top of the waterfall.
Disney has hit a few bumps in 2020, with theatrical releases almost non-existent, cruises shut down, and theme parks at extremely limited capacity. But nothing about the long-term business model has fundamentally changed. The company still makes great content, and has durable and proven ways to distribute and monetize that content around the world. That's why I'm never selling the stock.
A forever holding period
These companies aren't built to last just because of their size or the products they make -- they're built to last because of how fundamentally important they are to key parts of the economy and consumers' lives. And they've been able to adapt to new market realities and grow their businesses rather than succumb to new innovations. Apple, Visa, and Disney are worth holding forever, and that's exactly what I intend to do.