Few people have been better over the years at the art and science of Stock picking than the so-called Oracle of Omaha, Warren Buffett. If you are wondering what are the best stock right now you could do worse than see what his best stocks are and how they are doing. The Motley Fool writes about Warren Buffet’s Best Stocks of 2016 (so far).
Warren Buffett is among the best investors in stock market history, and millions of people follow his picks closely to try to find ideas for their own portfolios. Even though the overall stock market hasn’t made much headway so far in 2016, the Oracle of Omaha has managed to include some solid year-to-date performers within his own holdings. Four of Buffett’s stocks have given investors strong double-digit returns in 2016.
The four stocks featured in the article are in order of decreasing returns on the year, Kinder Morgan, Kraft Heinz, Wal-Mart and USG. Here is how these four stocks have done this year.
- KMI: +22%
- KHC: +19%
- WMT: +17%
- USG: +17%
The only one of these four that did not lose ground in the stock market pullback in January was Wal-Mart. USG the gypsum wallboard maker was down 35% a one point. Kraft-Heinz was down 20%. And Kinder Morgan was down 5% in January and again in February. If you decide what are the best stocks based on a snapshot like Motley Fool provides you are missing the point. How does a long term successful investor pick stocks? Please note that all of these stocks fit Buffett’s formula for only picking stocks in companies whose game plan for making money is easy to understand. Kinder Morgan is a depressed energy stock. Kraft Heinz is a food giant. Wal-Mart is the world’s largest retailer. And USG makes wallboard for homes and office construction.
Investing in What You Understand
Buffet stays away from tech stocks because he stays he does not know how to value them long term. It is clearer what people will pay for a snickers bar ten year from now that what the will pay for an iPhone. (Remember VHS?) However, if you are more comfortable in the tech world and up to date on trends the best stocks might be the next Apple, Microsoft or Oracle. The point is that investing in what you understand is a key part of picking the best stocks. The other key part is to pay attention to the market and the varying intrinsic value of stocks in your portfolio. If you are going to invest in volatile tech stocks you also need to learn how to do technical analysis of stocks in order to read market patterns in search entry and exit points.
Tracking the Market
The best stock for one time period may not be the best stock for the next. Buffett’s approach is to pick value stocks. These are the best stocks when the market falls taking all stocks with it. Then is the time to pick stocks with long term or even medium term profit for buying on the cheap and selling when the price rises or holding long term for steady dividends and gains.
