Warren Buffett Has Always Said This 1 Thing About Long-Term Investing. History Has Never Once Proved Him Wrong.

The large conglomerate Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) is widely considered to have one of the greatest stocks of all time, and it's got the numbers to back it up.

Between 1965 and 2025, the stock generated compound annual gains of 19.7% and a total gain of an astonishing 6,099,294%. Despite being quite successful in its own right, the broader benchmark S&P 500 has generated compound annual gains of 10.5% in the same time frame for a total gain of 46,061%.

Berkshire's success can be attributed to its longtime CEO, Warren Buffett, who only stepped down from the role at the end of last year. Buffett has always said this one thing about long-term investing, and history has never once proved him wrong.

Image source: The Motley Fool.

Buy stocks that can thrive through the economic cycle

It can be very difficult in today's market to be a disciplined, long-term investor. After all, there are frequent tales of how common retail investors made extreme riches from investing in meme stocks or meme coins, using options, leverage, or just pouring all of their capital into the high-flying artificial intelligence sector.

While some of these stories are certainly true, Buffett has always advised taking advantage of the power of time and compounding to accumulate wealth in a much more risk-averse manner. In his 1996 annual letter to shareholders, Buffett discussed how to invest successfully. The Oracle of Omaha said investors should be focused on purchasing businesses that are easy to understand and "whose earnings are virtually certain to be materially higher five, 10, and 20 years from now."

However, he cautioned that only a few companies can actually do this and that it will be tempting to "stray" from this mentality. "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes," he stated in the letter.

And it's in this sentiment that history has never once proved him wrong. Scores of companies have looked like fantastic stocks in the near term only to burn investors down the line. That's why you rarely see Buffett invest in the hottest stock in the market.

Insstead, Buffett is looking for stocks that can perform in down, steady, and up markets. Look at Coca-Cola, one of Berkshire's largest positions to this day, which the company began purchasing in the late 1980s. At this point, Coca-Cola is a mature company and is never going to post AI-like growth.

However, the company's incredible brand and expanding beverage portfolio have created a strong moat, making it one of the most defensive consumer staples stocks. This year, Coca-Cola shares are up nearly 26%, trouncing the broader market, as investors grow anxious over the AI trade.

Investors can mimic Buffett

Now, nobody can see the future, so everyone, even Buffett, is going to make mistakes. There will be times when investors must reevaluate long-term holdings due to a change in the thesis.

But that doesn't mean you can't protect your downside as best you can by looking for stocks that aren't fads but instead are reliable enough to perform across different market and economic environments.

History has shown that the longer one holds stocks, the less likely they are to lose money. However, this doesn't necessarily mean investors can buy any stock and expect it to work out in a decade. If you purchase an individual stock that is losing a lot of money, lacks a clear path to positive net income, and trades at a huge valuation, even holding it long-term may not save you.

That's why it's important to take Buffett's advice and actually look for stocks that can grow earnings over the long term and that you would be willing to hold for a decade. The growth doesn't have to be extraordinary every year, but consistent, high-quality growth will win the market over more than temporarily incredible earnings growth followed by large declines.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.