Warren Buffett once wrote in a letter to shareholders, “If you’re not willing to own a stock for 10 years, don’t even think about buying it for 10 minutes.”
Outperformance and stocks may seem like contradictory terminologies this year. But despite double-digit losses from the major indices last year, and sub-par gains so far in 2023, there are still some individual stocks that have posted big gains over the period. When it comes to price performance, there has also been some impressive growth in the last two years. However, professionals say most investors should consider other options.
Houston, Texas-based hydrocarbon exploration company Occidental Petroleum Corp., or OXY, has reported an 84% increase in overall price performance since March 2020, Morningstar reported. statistics Show. And though the stock has posted a 1.3% loss so far in 2023, that hasn’t stopped famed investor Warren Buffett from continuing to add shares of it to his portfolio. Buffett’s Berkshire Hathaway bought 5.8 million shares of the oil company at a price range of $59.85 to $61.90 in three separate trades on Friday, Monday and Tuesday, according to the most recent SEC filings. Admission, Today his Omaha, Nebraska-based firm owns 200.2 million shares of Occidental, worth an estimated $12.4 billion at Wednesday’s closing price of $62.15.
So why have petroleum stocks like this one outperformed the market since 2020? For one, crude oil prices are hovering around $100 a barrel through the first half of 2022. Although they have recently started to decline – according to Bloomberg, as of March 9 to about $77 a barrel. statistics Natural gas has also seen a modest increase since 2020, from $8.81 per million British thermal units, or BTU, last August to $2.38 in February 2023, the government statistics Show. Although this is indeed a notable decline, the area is still above $1.91 in February 2020.
Ready to Cash In? Pros say proceed with caution
If you’re hoping to steal a page from Buffett’s playbook and cash in on these crazy-high gains, NerdWallet investment spokesperson Andy Rosen has a warning. “A stock with year-on-year gains will make you money if you invest at the beginning of the year, but that doesn’t mean it will pay off if you invest now,” he said. Individual stocks come with a lot of risk. “You have to do your own analysis as to whether the good times will continue for the property you are considering.”
Eventually the ride will end, said Peter Krull, CEO of Earth Equity Advisors, a timing game that may be too high-risk for most retail investors. Krull said, “There are many examples of people who have placed bets on a single stock and made good profits, while there are many who have lost.” “The most prudent investment principle is to own a diversified portfolio.”
Or you can take another page from Warren Buffett’s playbook, this one aimed at most investors. Buffett said a few years ago, “In my view, for most people, the best thing to do is own an S&P 500 index fund.” And he’s also a believer — at least for most investors — in thinking long term. “If you’re not ready to own a stock for 10 years, don’t even think about holding it for 10 minutes,” he said.
But if you want to pick individual stocks, here’s some of his advice: “I don’t think most people are in a position to pick a single stock,” Buffett said during the 2020 Berkshire Hathaway annual shareholders meeting. “Some [are]Maybe, but on balance, I think people are better off buying a cross-section of America and forgetting about it.
This story was originally published in October 2022 and has been updated.
The advice, recommendations or rankings in this article are those of Marketwatch Picks, and have not been reviewed or endorsed by our commercial partners.
Credit: www.marketwatch.com /