How Buffett Beat The Market This Year

How Buffett Beat The Market This Year

While the S&P 500 has fallen over 15% this year, shares of Warren Buffett’s conglomerate Berkshire Hathaway are up roughly 5.5% for the year, fueled by its large stake in energy companies Chevron and Occidental, reports an article in CNN. Oil stocks skyrocketed this year as a result of elevated crude prices in the wake of Russia’s invasion of Ukraine, and Occidental’s shares have more than doubled, making it the top winner in the S&P 500.

But it’s not only energy stocks that served Buffett well this year. The legendary investor has always had an affinity for non-fussy consumer stocks such as Coca-Cola and Kraft Heinz, both of which went up about 10% in 2022. And many of the other staples that Berkshire holds such as insurance giant Geico and name-brands like Dairy Queen, Duracell, and Fruit of the Loom, have stayed solid amid this year’s volatility. While Berkshire posted a net loss in the first, second, and third quarters thanks to plummeting stocks like Apple and Bank of America, its operating profit is up almost 20%, through September. The real question is whether Buffett can maintain this success through 2023, as inflation remains persistent, high interest rates impact Berkshire’s banking investments, and oil prices start to go down. And as Buffett turns 93 and his business partner Charlie Munger turns 99 next year, many are wondering just how much the company’s top executives—particularly those poised to take over after Buffett—will step into the spotlight, the article contends.

After missing out on buying the dip in 2020, Berkshire has been snapping up stocks this year, most notably Taiwan Semiconductor. It’s also been using some of its massive cash stockpile to repurchase its own shares, something that only about 5,000 managers have done, according to VerityData research cited in the article. That’s led some to wonder if C-suite leaders aren’t as confident that a market rebound is coming and if investors should be as cautious. But Ben Silverman of VerityData maintains that insiders also aren’t selling too much stock, which could be an indication that no one wants to call a market bottom. “They seem willing to hold on but not to put more skin in the game,” he told CNN. So while CEOs and those in the know on Wall Street may be acting cautiously, they’re just as in the dark about where the market is going as the rest of us.


Validea runs stock and ETF models based on investment strategies with proven long-term track records. If you’re new to Validea, consider taking a look at our product overview or introductory videos.