“What Stock Should I Buy That Will Make Me a Lot of Money?

This is a question that I get all the time. So much so that I had to make a blog post about it. In other words, if I’ve sent you this link it’s because I’ve answered this question hundreds of times and wanted to save myself the trouble of a long drawn-out answer and also help the reader by giving them a high-quality response that I put a little effort into writing.

So what stock should I buy if I have x amount of dollars, and I want that sucker to grow as much as possible? What's your best long-term stock to buy and forget that will make me oodles of money? What's your #1, biggest pick?

Truthfully, I can’t answer that question. And I am not saying that as some type of sales pitch or to hide a big secret. I say this because there’s no practical way to answer that question. When someone asks me what single stock to buy, I have to first unpack many things.

For instance: Are you trying to invest a sum of money to win a contest for the largest return and it doesn’t matter if you lose money? Over what period of time are you investing? Can we revisit things every month and make changes? What about every year? Or are you going to completely forget about it and never look for ten years (not advised)? How often will you reassess things? What if the stock goes down 20% before it goes up? How would you feel about that? What if the stock has barely broken even after a year? Are you okay with that? These are all legitimate questions I would have to answer.

Ok, you say. You ponder a minute and come back with this simple question: What is one stock I can buy and forget for 10 years that will make me a ton of money? The reality is I could give you a list of companies that I think are growth juggernauts without recommending whether to buy or sell them today: Apple, Nvidia, United Health, JP Morgan Chase, Eli Lilly, and Amazon, to name a few. However, just because I like a company today shouldn't mean that you blindly buy it and wait for it to grow like an oak tree in the woods. Why? Because things change. I could completely guess on a big company just to give an answer, but I’m not going to throw darts with my professional opinion. Just over ten years ago, Exxon surpassed Apple as the largest company on Earth. As of writing this, Apple is more than seven times the size of Exxon. Things change.

A great company may not be in the same position several years from now. It may be highly overvalued in the short term and due for a price correction. Things may change with the company next quarter and make it extremely over or undervalued relative to where it was before. A stock price may be, in my complete opinion, completely irrational for an extended period (in a good or bad way) and you must have this understanding going into an investment so you have the right expectations. Otherwise, you will be susceptible to making a bad decision.

Truthfully, I think asking this question itself represents the wrong investment mindset. There is not one stock that you can swing for the fences on and expect success. Sure, a good company can double and triple over time, and I'm not saying it can't be done; I am saying it's not a good investment strategy. The best buy-and-forget strategy would be to buy an inherently diversified index fund (such as the Dow Jones Industrial Average or S&P 500) so you do not have to worry about unexpected changes with just one company.

The absolute best answer to the initial question would be to actively manage a portfolio with multiple stock positions and take advantage of opportunities that present themselves. This is precisely what I do. I would never take an entire portfolio and put it in one stock; I would refuse to take on a new client before I implemented that strategy.

I would be willing to bet if the average person could count cards they would still lose money playing Blackjack. Why? Because they'd become overconfident and overbet on hands they should but don't win. The key to successfully investing in stocks is spreading out your bets and not putting all of your money in a select stock or sector. With a disciplined approach, the goal should be to win more than you lose over the long haul. Absent of good luck, diversification is undefeated when it comes to investing. And I guess that's my ultimate response to investing in something for the long term to get the biggest rate of return.