Many investors may be just too busy with their day jobs to analyze securities and spot value in a turbulent market environment that has gotten more expensive in recent weeks. Undoubtedly, DIY investors should always ensure they put in their share of due diligence to tilt the risk/reward scenario in their favour.
However, there is certainly no shame in taking on a more passive approach with, say, ETFs (exchange-traded funds) or mutual funds. Indeed, with index funds and mutual funds, you’re either settling for market average returns or delegating research and analysis of stocks to a “professional” money manager.
Indeed, if you opt for professional management, my best advice to you would be to watch out for the fees! A lot of investment pros just can’t beat the market on a consistent basis, yet they can charge management expense ratios (MERs) in the ballpark of 2-3%. That’s an obscene fee, in my opinion, especially if you’re investing a considerable sum (let’s say $50,000 or more).
In this piece, we’ll look at two stocks that I believe that hands-off investors can buy and just hang on for years at a time without having to worry about stock charts, technical analysis, or massive shifts in the industry landscape. The following companies, I believe, possess wide economic moats. This means each firm stands to continue generating economic profits over the foreseeable future without giving up too much ground to potential rivals.
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National Bank of Canada
National Bank of Canada (TSX: NA) is one of my favourite Canadian banks and one that doesn’t get as much attention as its larger peers. The bank has delivered a robust 62.6% in capital gains over the past five years. Meanwhile, National’s bigger brothers in the Big Six haven’t really been able to put up better results. Indeed, bigger is not always better when it comes to stocks. And when it comes to value in the Canadian financial scene, I believe National is the best horse to bet on for the next 10 years (or more).
Shares trade at 10.1 times trailing price to earnings (P/E), with a 4.46% dividend yield. A pretty stellar deal for a top performer that could continue its hot run relative to industry peers moving forward.
After outperforming in recent years, is the stock still one of the best banks for your buck? I think it is.
Fairfax Financial Holdings
Up next, we have Fairfax Financial Holdings (TSX: FFH), an insurer and investment holding firm run by the legendary money manager in Prem Watsa. The man is known as Canada’s Warren Buffett, and the recent run in the stock, I believe, proves Watsa remains one of the best investors on Earth. Over the past two years, shares have more than doubled, surging 116.7%. Smart investments and improving underwriting remain drivers that could keep powering the stock in 2024 and 2025.
My takeaway? Why pay your bank’s mutual fund manager a 3% MER when you can buy shares of FFH, a company run by arguably the best investor in the country? Personally, I’d rather put my money in Mr. Watsa as it steers FFH stock to even higher highs.
