Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%) has been one of the steadiest and most reliable stocks on the market for the past few decades. In 2022, it showed its value again, because while most of the market was bitten by the bear, Berkshire Hathaway trudged forward and returned 4.1%, according to S&P Global Market Intelligence.
Can the company run by Chairman and CEO Warren Buffett keep winning in 2023?
A history of winning, particularly in down markets
Berkshire Hathaway has been winning for a long time and has the returns to prove it. But its value as an investment really is noticeable in years like 2022, as it tends to outperform in down markets.
The S&P 500 ended 2022 down by about 19% while the Nasdaq Composite was off by 33%. Berkshire Hathaway, in stark contrast, rose 4.1%. One can also look back a few years to 2018, when Berkshire Hathaway gained 2.8% while the S&P 500 fell 6.2%.
Over the longer term, Berkshire Hathaway has averaged a 13% annualized return over the past 10 years, compared to 10.3% for the S&P 500. Over the past 20 years, it returned 10% on an annualized basis, while the S&P 500 returned 7.4%. (These numbers are through Jan. 9, 2023.)
Can it keep winning?
Berkshire Hathaway is a massive conglomerate with more than five dozen wholly-owned companies under its umbrella, among them Geico, Dairy Queen, and Duracell. But it's also known for its impressive portfolio of nearly 50 stocks that is now worth roughly $300 billion. Buffett is considered a legendary investor, so what he and his team add or subtract from that portfolio, it can move markets.
The day will come when Buffett, 92, and his right-hand man, Charlie Munger, 99, will no longer be running the company, but his successor for the top job has already been named: Greg Abel, a current vice chairman. Ajit Jain, another vice chairman, will also follow in a key leadership role. Both have been with Berkshire Hathaway and Buffett for decades, and it should be a smooth transition whenever it does occur, with the values and principles that made the company so successful remaining in place. Among his investing tenets, Buffett looks for companies with excellent management, strong competitive advantages, robust margins, strong financials, and good overall values, among other key attributes.
While 2023 could be as challenging as 2022 (at least in the first half), Berkshire Hathaway is up 2% as of Jan. 10, and the consensus price target among Wall Street analysts points to it gaining 9.6% on the year -- which would probably beat the market, given current projections.
There are no sure things in investing, but over the long term, you won't find too many stocks more steady and reliable than Berkshire Hathaway.
