If you're reading this and think you're going to make money on the stockmarket, think again…
Warren Buffett, the world's greatest investor, attests, "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."
He does this for many different reasons but today's volatile market is an obvious reason why you should only be focused on the long-term. This strategy mitigates losses, yet maximises your chances of capital gains.
Remember, it's about time in the market not timing the market that's important. What's more, building up a diversified portfolio will help you avoid sector-specific headwinds.
Here are five Australian companies which long-term investors can consider adding to their watchlists and/or portfolios.
1. Rio Tinto Limited (ASX: RIO) is Australia's biggest iron ore miner. However, thanks to a diversified commodity base, Rio provides the healthiest long-term exposure to Australia's most lucrative export and a range of other commodities such as copper, aluminium, bauxite and gold.
2. Australia and New Zealand Banking Group (ASX: ANZ) could, over the next two decades, prove to be our country's most successful big bank. The group is currently pushing into Asia whilst also boosting its exposure to Australian mortgages.
3. Northern Star Resources Ltd (ASX: NST) has been Australia's most successful miner over the past 18 months. With a superior balance sheet, capable management and low cost production, Northern Star was able to survive the worst gold price drop in over 30 years and emerge stronger.
4. The Reject Shop Ltd's (ASX: TRS) share price has fallen sharply in 2014, affording long-term investors an opportunity to buy the discount retailer at bargain prices.
5. Newsat Limited (ASX: NWT) is Australia's only pure play satellite communications company. This small company owns several orbital slots which it hopes to fill with numerous satellites in coming years. Newsat is small, has debt and should be considered a high risk investment.
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Each of these companies should be on your watchlist. If I were to choose one stock to buy right now, it'd be The Reject Shop. Whilst I think ANZ will be the best big bank to hold over the long-term its shares are a bit pricey and new investors are advised to adopt a wait-and-see approach.
