Do you know what the hardest thing for investors to do is? Nothing. That's right -- simply waiting patiently. It's been said that 99% of long-term investing is doing nothing. The other 1% involves finding the right stocks to buy so that you don't have to do anything.
Unfortunately, a large proportion of the 100 most widely held stocks in Robinhood investors' brokerage accounts aren't the kind that will allow their owners to rest easy for years as time works its growth magic. There are a few, though, that are perfect for do-nothing (or almost nothing) investors. Here are three popular Robinhood stocks that you can buy now and never sell.
When you're in search of truly long-term portfolio holdings that you can buy and basically ignore for years, there are two main attributes you'll want to look for. The first is a strong moat. The second is optionality -- in other words, that the company has multiple ways in which it could grow. Amazon.com (AMZN -0.77%), the ninth most popular stock on Robinhood, has both of those attributes in spades.
One component of Amazon's moat is its cost advantage. It can sell lots of products across an array of categories at highly competitive prices because it has lower overhead costs than brick-and-mortar retailers.
Another aspect of Amazon's moat is its network effect -- which refers to a situation in which the more people use a system or product, the more valuable it becomes to each user. The more customers Amazon has, the more new third-party sellers it attracts. And as ever more sellers use Amazon to market their products, that draws still more customers, who attract more sellers in a virtuous cycle.
But what I really love about Amazon is its optionality. The company continues to demonstrate its ability to find new ways to grow. For example, it recently launched a program offering six-month prescriptions for as little as $6 to Prime members. Look for Amazon to continue expanding into other areas of healthcare, as well as into new markets that it has yet to reveal.
Disney (DIS -0.01%) ranks No. 8 on Robinhood's most popular stocks list -- one position ahead of Amazon. And it too possesses a strong moat and optionality.
Arguably the biggest competitive advantage for Disney is its beloved brand. It has been the most admired company in the entertainment industry on Fortune's annual list for a remarkable 18 consecutive years.
It also boasts a massive and unparalleled content library. Eight of the 10 top-grossing movies of all time belong to the company, as do 15 of the top 20. The company has made more than 750 movies -- and that total excludes the many titles it picked up with its 2019 acquisition of 21st Century Fox. And Disney's TV networks give the company a huge library of new and old series.
Aside from its record of developing content that audiences love, where Disney really shines is in monetizing that content in multiple ways. A new Marvel Cinematic Universe movie, for example, can lead to the launches of a wide range of products such as clothing and toys. That movie will also eventually be available on the Disney+ streaming service, attracting new viewers and boosting the company's subscription revenue.
Generations of families have enjoyed Disney's TV shows, movies, and theme parks. I expect the company to continue pioneering new forms of entertainment for years to come. Disney is absolutely the kind of stock investors can buy and never sell.
Vanguard 500 Index Fund ETF
Technically, the Vanguard 500 Index Fund ETF (VOO -0.01%) isn't a stock. However, the exchange-traded fund (ETF) trades like a stock. And it currently occupies the No. 45 spot among the 100 most popular investments on Robinhood.
There are three main reasons to invest in index funds like the Vanguard 500 Index Fund ETF. Your money is diversified across lots of stocks (in this case, 500 of the biggest U.S. companies.) Index funds also offer lower costs than other types of funds. Perhaps best of all, index funds typically provide attractive long-term returns.
If you asked legendary investor Warren Buffett for advice on what to invest in, he'd probably point you to the Vanguard 500 Index Fund ETF. The billionaire has said that his will stipulates that 90% of the money he is leaving to his wife should be invested in a low-cost S&P 500 index fund. You won't find an S&P 500 fund with a lower cost than the Vanguard 500 Index Fund.
I personally own Amazon and Disney, and intend to hold onto my shares as long as I'm alive and kicking. But I also have money in the Vanguard 500 Index Fund ETF. And if I had to choose just one popular Robinhood "stock" to buy and never sell, it would be the ETF.