Warren Buffett isn't a riverboat gambler. The legendary investor didn't amass a fortune of over $113 billion by taking ill-advised risks.
It makes sense, therefore, that many of the stocks in Berkshire Hathaway's (BRK.A -0.76%) (BRK.B -0.69%) portfolio are built for the long haul. But which are the least likely to be huge losers? Here are my picks for the three safest Buffett stocks to buy and hold for the next 20 years.
1. Mitsubishi
My first pick might be somewhat surprising. However, there's a good case for Mitsubishi (MSBHF 0.55%) as Buffett's safest stock of all.
Every investor knows that a diversified portfolio helps reduce risk. Mitsubishi offers a high level of diversification in a single stock. The Japanese conglomerate owns close to 1,700 companies. These businesses span 10 industries, including chemicals, consumer products, food, and industrial infrastructure.
Mitsubishi has been in operation since 1870. The company has survived and thrived throughout nearly every economic curveball imaginable. Mitsubishi's business model should allow it to reliably generate solid cash flow going forward, too.
Many stocks, including some that Buffett owns, sport premium valuations with the stock market's rise this year. Mitsubishi, though, remains cheap, with its shares trading at only 10.5 times earnings and 0.49 times sales.
2. Markel Group
I could have selected one of the stocks of the other Japanese trading houses that Buffett owns. They all share most of the same positives as Mitsubishi. Instead, though, I've put Markel Group (MKL -1.00%) second on the list of the safest Buffett stocks to buy and hold for the next 20 years.
Markel offers quite a bit of diversification, too, albeit not to the same extent that Mitsubishi does. The company's core business is specialty insurance. It also owns a family of 19 companies through its Markel Ventures unit, including luxury handbag maker Brahmin, home builder Eagle, and concierge primary care provider PartnerMD.
Investing in Markel is almost like investing in an exchange-traded fund (ETF). The company's investment portfolio features more than 100 stocks. Pretty much every sector is represented, with fast-growing tech stocks such as Alphabet and Meta Platforms to healthcare stalwarts Johnson & Johnson and Thermo Fisher Scientific.
No, Markel isn't as inexpensive as Mitsubishi. However, its valuation is still attractive, with a forward earnings multiple of 15.8x.
3. Berkshire Hathaway
With Buffett's track record of smart risk management, it shouldn't be surprising that Berkshire Hathaway itself makes the list of his safest stocks to buy and hold. Berkshire features several of the characteristics that make Mitsubishi and Markel Group good picks.
Like both of these two companies, Berkshire Hathaway gives investors a lot of diversification. Berkshire is perhaps best known for its insurance business. However, it owns more than 60 subsidiaries that operate in a wide range of industries.
There's additional diversification in Berkshire's investment portfolio. The conglomerate holds positions in more than 40 publicly traded companies, with especially large stakes in Apple, Bank of America, American Express, and Chevron.
Berkshire does have one unique risk that's worthy of note. Buffett is 93 years old. It's possible that the stock could experience turbulence if he has any serious health problems. The good news, though, is that Buffett has developed capable leaders to take the baton down the road. This stock has been a big winner over the last 20 years and has what it takes to be successful over the next 20 years.
