When Warren Buffett talks about how you want to invest in America for the long term, he's talking about how betting against the country's companies is a sucker's game because of our innate progress and natural expansion.
He's made a point almost his entire investing life that wealth can be made by owning the best of the best, not flipping them, not flitting in and out, but getting long and staying long.
I think he's got an edge on almost all of us. He's the finest investment mind of the generation and he's got a team of people who can stay up on his stocks. I always say if you can't keep up, if you can't research and examine and spend time knowing what you own, if you couldn't give me three bullet points why you liked a stock, then you need to invest in a different fashion. You need to own an index fund. I think owning the S&P 500 will do the trick.
But what if you like individual stocks? What if, once you've diversified with an index fund, you decide to buy some stocks? Is it possible to pick winners? The purists, the stock ideologues who insist you have no ability to pick stocks, would say you are taking your financial life in your hands. I would never say that about their beloved asset. They can coexist.
I think this Dow 20,000 occasion can be a teaching lesson about how you can spot long-term winners. It is also an excellent reminder that some companies can triumph over any environment simply because they are so well run.
So let's do this. Let's go back in time to when the Dow was at 10,000 last, in 2009, and see who the five biggest winners in the Dow are and ask yourself whether you could spot them and if they have the possibility to keep going higher, because history's not enough here.
First, the biggest winner is United Health (UNH) , which has rallied 551% in the last 10 years. As someone who has run a company that has to deal with this company to insure my employees, can I just say this is one fabulous business. There aren't that many competitors -- at one point I was trying to pit United Health against Oxford Health to get a better price for a couple of hundred employees and United Health bought Oxford during the negotiations. Take a guess where my bill went after that.
United Health had the vision to recognize that it had to be more than just a health care maintenance organization. It created Optum, which, as its website says, serves the physical, emotional and financial needs of 81 million individuals.
United Health had the smarts to pull out of Obamacare when the company saw it couldn't make money participating in the exchanges. That move, I think, has made it the only health care company worth owning because it is not trapped in a system that is going away. It's the only health-care Trump stock I know. I think it can go much higher.
Next up, Home Depot (HD) , up 399%. Now, I have to tell you this statistic is nothing short of amazing because Home Depot put up these numbers during the worst housing recession in history. You could easily have argued that this company would not survive this vicious downturn.
That would be wrong. Home Depot used the downturn to solidify its stature as the nation's No. 1 do-it-yourself store chan. How did it do that? Because it had a remarkable CEO, Frank Blake, who energized the place, used technology to make the place work great for the customer. He stocked the store with friendly, helpful workers and, for us power gardeners, he made it the best store in the world to shop. It helped, of course, that much of what is sold at Home Depot isn't easily Amazoned. But I think Frank just ran better stores with the help of the best CFO in the country, Carol Tome, and Frank's successor, the current CEO, Craig Menear.
How about No. 3, Apple (AAPL) , which has rallied 328%. When you have the best product, the most sought-after product, you are going to do well. That's the iPhone, born 10 years ago. I know there are so many people I meet who tell me I am as washed up as Apple for supporting this company. They usually text it to me on an iPhone or call me on an iPhone. All I can think of is when the stock was at $93 last spring and I read so many articles about how Apple's best days are behind it, CEO Tim Cook came on to say he disagreed and laid out a multiyear strategy. It's now at $121. The prosecution rests. Sure, the quarter may not be that special, but the company has $40 per share overseas and if that can be repatriated, it could be huge for shareholders. (Apple is part of TheStreet's Action Alerts PLUS portfolio.)
Next up is Visa (V) . Some companies just ride a secular wave for as long as possible. All around the globe, there are people who still use checks. Visa's the paper-to-plastic company and it's a vicious competitor for your business. There are years of growth ahead, but I must point out that Charlie Scharf, one of the most hard-charging CEOs ever, just retired and that makes me less certain about the future of the company versus, say, MasterCard (MA) , with its phenomenal CEO, Ajay Banga. I'd make the switch.
Finally, there's Walt Disney (DIS) , which to me, aside from Apple, is one of the most obvious stocks to buy in the world. Anyone with kids knows that Disney is the common ground that all infants have. Its library, its theme parks are legion. So is its amazing film division, which produces hit after hit like clockwork. The stock's been down on its luck of late, a function of declining ESPN subscribers. But CEO Bob Iger has multiple levers, including selling ESPN if he has to -- I think that would be a big mistake -- to continue to generate the 266% return that he gave you from Dow 10,000 to 20,000. (Disney is part of TheStreet's Trifecta Stocks portfolio.)
Let's see, it's likely that United Health is your insurer -- it's mine. You might go to Home Depot regularly -- I am there probably 10 times alone during the gardening season and we have to run there for Bar San Miguel all the time. I have a Visa card in my wallet. I took my kids to Disneyworld, the Grand Floridian for four straight years when they were little and my default channel is ESPN.
Now let me add another layer on here. These stocks are integral to the rally since Trump was elected. I don't think any of them has gotten ahead of itself because the fundamentals are terrific. Most will benefit from lower corporate taxes and repatriation of foreign assets. They are perfect examples of why I say the rally is reasonably rational.
So, to sum it up, the biggest five winners since the Dow powered from 10,000 to 20,000 were getable and in some cases downright obvious. They aren't up here on a sugar high. They're here because management's been terrific, innovation extraordinary and attention to the customer superb. Those are difficult traits to erase even if Donald Trump fails to get much done as the 45th president of the United States.