In the current economy, "foreseeable" lasts no more than five years - hardly a lifetime. Viewed that way - as something that a fiduciary would feel comfortable recommending for a novice - the end is here because no self-respecting adviser can suggest a buy-and-forget-it strategy for the foreseeable future. The concept behind a widow-and-orphan issue was really all about a friend, family member, broker or other trusted adviser trying to use stocks to take care of the future by going the simplest route possible. In the mid-1970s, banks would have started popping up on any list of stocks an investor might buy and hold forever.Įach of those industries has undergone massive changes, and through periods where the stocks that once seemed so safe had become the picture of danger.Īs such, GM's fall should mark the official acknowledgement that widow-and-orphan stocks have gone the way of the dodo bird their extinction forces even the most simplistic of investors to re-evaluate the way they look at securities.
Then it was big manufacturers like the automakers, as well as newspaper companies. Typically, it was a blue-chip stock, in a non-cyclical business - so that it never got too hot or too cold regardless of the economic climate - paying a big dividend where both the payout and the stock were considered "safe."Ī century ago, railroads, utilities and basic-materials companies like steel manufacturers were widow-and-orphan issues. The proverbial "widow-and-orphan stock," the kind of issue that was suitable to hold, presumably for life.