Introduction
If I had to choose only one stock to buy and hold forever, my pick would be Berkshire Hathaway (BRK.B). This company is not just a single business but a diversified conglomerate with holdings across multiple industries, making it one of the safest and most growth-oriented investments for the long term.
Why Berkshire Hathaway?
Built-in Diversification
Unlike investing in a single-sector stock, Berkshire Hathaway owns outright or has major stakes in companies across insurance, energy, railroads, consumer goods, technology, and finance. This built-in diversification reduces risk while maintaining high growth potential.
World-Class Management
Berkshire was built by Warren Buffett and Charlie Munger, two of the most successful investors in history. Even after their leadership, the company is structured for long-term success due to a strong corporate culture and disciplined capital allocation.
Financial Strength and Stability
Berkshire Hathaway holds over $150 billion in cash, giving it flexibility to invest in opportunities or withstand economic downturns. It also owns large stakes in Apple, Coca-Cola, and American Express, benefiting from their long-term success.
Resilience During Recessions
Many of Berkshire’s businesses—such as utilities, insurance, and railroads—are essential services that generate revenue even during economic downturns. This makes Berkshire a safer long-term bet compared to high-growth tech stocks that can be more volatile.
No Dividend, But Strong Capital Growth
Unlike many long-term holdings, Berkshire does not pay dividends. Instead, it reinvests profits into acquisitions or stock buybacks, compounding shareholder value over time. Historically, this strategy has delivered better long-term returns than many dividend-paying stocks.
Historical Performance of Berkshire Hathaway
From 1965 to 2023, Berkshire Hathaway’s compounded annual growth rate (CAGR) was 19.8%, compared to 10.2% for the S&P 500. This means Berkshire has historically doubled the market’s return over the long run.
Investment Example: $1 Million in Berkshire Hathaway
Let’s assume I invest $1,000,000 in BRK.B, and it continues to grow at a 10% annual return, which is a conservative estimate compared to its historical 19.8% return.
Future Portfolio Value in 20 Years
Using the compound interest formula:
A = P (1 + r)^twhere:
- A = future value of the investment
- P = initial investment ($1,000,000)
- r = growth rate (10% or 0.10)
- t = number of years (20)
In 20 years, my investment could be worth over $6.7 million, purely through stock appreciation, without any dividends.
Potential Risks
While Berkshire Hathaway is one of the safest long-term investments, no stock is completely risk-free. Here are some potential risks:
- Leadership Transition: Warren Buffett and Charlie Munger have been instrumental to Berkshire’s success. Future management must maintain the same disciplined investment strategy.
- Economic Cycles: While Berkshire is diversified, its businesses still face cyclical risks. A prolonged downturn in insurance or railroads could impact earnings.
- Stock Performance vs. Market: As Berkshire grows larger, it may not be able to outperform the market as significantly as in the past.
Conclusion
Berkshire Hathaway is my top choice for a buy-and-hold-forever stock because it combines: ✔️ Diversification across industries ✔️ Smart capital allocation ✔️ Recession resilience ✔️ Decades of proven growth
While no stock is truly “forever,” Berkshire Hathaway comes as close as possible, making it one of the best long-term investments for wealth preservation and growth.
