One of the most dramatic moves on the US markets in 2022 was the collapse of the Tesla Inc (NASDAQ: TSLA) share price.

Tesla shares started the year at US$352.26 each. But by the end of last month, the electric vehicle and battery manufacturer was down to just US$123.18 a share. That’s a loss for Tesla stock of just over 65% for the year.

Ouch.

Tesla’s 2022 performance was quite a change of pace for a company that has previously given investors mindblowing gains. Tesla was up more than 500% in 2020 and up another 50% or so in 2021. 

So with a selldown of this magnitude, are we looking at the mother of all buy-the-dip opportunities? Or is Tesla just another falling knife right now?

Well, let’s get into why the Tesla share price had such a rough year. It was undoubtedly partly due to rising interest rates in the US.

Just like Australia, the United States has seen a very sharp increase in interest rates over the past 12 months, as the US Federal Reserve moves to clamp down on inflation.

This has been especially painful for most growth companies, not just Tesla. Name any prominent tech stock listed in the US, and chances are it had a rough year in 2022.

Has Elon Musk’s Twitter antics damaged the Tesla share price?

But not helping Tesla’s cause was its CEO and flagbearer, Elon Musk. Musk has had, well, a very interesting 12 months, to put it lightly. Not only did he buy social media platform Twitter outright, but he has also raised many eyebrows with his new policies championing free speech at the company.

Many investors have worried that Musk’s preoccupation with Twitter has seen him neglect Tesla, as well as potentially alienate its affluent customer base. This probably explains why the Tesla share price’s most painful months were in the back half of 2022.

And yet I would argue that Tesla’s brightest days are still in front of it. Despite the issues in its leadership team, the company still posted a 40% increase in vehicle deliveries in 2022 to 1.31 million, with production up 47% to 1.37 million.

That’s breakneck growth for any company, but it is especially impressive for a capital-intensive vehicle manufacturer like Tesla. 

Tesla is also preparing to launch its much-anticipated ‘cybertruck’ in 2023, which could give its numbers an even bigger boost in years to come.

Trucks (or utes as we call them here) are a segment of the market that Tesla doesn’t currently address, so this could see its market share expand even further. Ditto with its rollout of the Tesla Semi which is currently underway.

So all in all, I think that the current Tesla stock price, now trading at its lowest level in almost three years (with a current price-to-earnings (P/E) ratio of 36.9), is a compelling buying opportunity considering the growth runway that remains in front of this company.

The post Tesla share price correction: A chance to get rich? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price has sunk lower in the last month, but could this be a buying opportunity?

Pilbara shares have fallen 11% since market close on 9 December and are currently fetching $3.97. In today’s trade, Pilbara shares are up 1.02%.

So what is the outlook for the Pilbara Minerals share price?

Could Pilbara go higher?

Analysts at Citi have upgraded the Pilbara Minerals share price to a buy with a $4.70 price target, according to The Australian. This implies an upside of about 18%.

Pilbara is planning to pay its maiden dividend in the 2023 financial year. Macquarie analysts are tipping Pilbara to pay a dividend of 34 cents per share this year.

Pilbara is producing lithium from the Pilgangoora Project in the Pilbara region of Western Australia.

My Foolish colleague Tristan reported yesterday that seven analysts rate it as a buy, three as a sell and six as a hold. Goldman Sachs has a hold rating on Pilbara, also with a $4.70 price target.

Despite falling in the last month, Pilbara shares have leapt nearly 5% since market close on 30 December.

The Office of the Chief Economist is tipping spodumene prices to rise from an average of US$2,700 a tonne in 2022 to US$4,010 a tonne in 2023 before falling to US$3,130 a tonne in 2024. Lithium hydroxide prices are forecast to rise from US$39,900 in 2022 to US$61,200 in 2023 before sliding to US$48,500 a tonne in 2024.

Pilbara achieved an average price of US$7,552 per dry metric tonne (dmt) in its latest spodumene concentrate auction on the digital Battery Metals Exchange in December.

Pilbara Minerals share price snapshot

The Pilbara Minerals share price has jumped 11% in the last year.

Pilbara has a market capitalisation of about $11.9 billion based on the current share price.

The post Down 11% in a month, should I buy the dip in Pilbara Minerals shares? appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 lithium shares with dividend yields over 7%. Say, what?
• 5 things to watch on the ASX 200 on Tuesday
• Here are the 3 most heavily traded ASX 200 shares on Monday
• What is the outlook for the Pilbara Minerals share price in 2023?
• What’s the outlook for ASX 200 lithium shares in 2023?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Tuesday is shaping up to be rough one for many All Ordinaries Index (ASX: XAO) shares. Fortunately, though, not all companies that call the index home are suffering.

Indeed, two are soaring into the green to crack new 52-week highs.

Right now, the All Ords is down 0.2%, trading at 7,137.1 points.

So, which stocks are bucking the trend to reach long-forgotten heights? Let’s take a look.

2 All Ords shares trading at 12-month highs

The first All Ords share posting a new 52-week high today is medical device developer Polynovo Ltd (ASX: PNV).

It’s soaring 7.83% at the time of writing to trade at $2.48. However, earlier today, it hit $2.50 – marking an 8.7% gain and the highest the stock has been in 18 months.

Interestingly, there’s been no news from the healthcare favourite to explain today’s rise.

In fact, the last time the market heard price-sensitive news from Polynovo was in mid-December when the company announced the end of a $53 million capital raise – offering new shares for $1.90 apiece.

Thus, those who got in on the raise have already seen a 30% return on investment (ROI).

Joining Polynovo in posting a new 52-week high today is fellow All Ords healthcare share Aroa Biosurgery Ltd (ASX: ARX).

It reached its highest point since October 2021 earlier today, leaping to $1.175 – 2.2% higher than its previous close. It has since slipped slightly to $1.1725, representing a 1.96% gain.

Also, like Polynovo before it, the company hasn’t released any news to explain its latest gain.

The last piece of price-sensitive news from Aroa Biosurgery, detailing its half-year performance, dropped in late November.

Then, the company announced its product sales grew 44% year-on-year while its normalised earnings before interest, tax, depreciation, and amortisation (EBITDA) was positive.

The post 2 ASX All Ords shares cracking new 52-week highs on Tuesday appeared first on The Motley Fool Australia.

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• Bell Potter names the ASX healthcare shares to buy in 2023

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PolyNovo. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I love investing in ASX shares that provide mission-critical products. Companies with products so deeply embedded and vital in their customers’ operations that they’re hard to give up.

These products are sticky, contributing to high levels of customer retention and recurring revenue. This stickiness can also act as leverage for lucrative pricing power.

With that in mind, let’s take a look at three ASX 200 tech shares that, in my view, provide mission-critical products.

WiseTech Global Ltd (ASX: WTC)

Kicking things off, WiseTech is a leading provider of freight forwarding software through its flagship CargoWise product.

CargoWise is an all-in-one logistics platform used by 10 of the top 25 global freight forwarders.

Companies like Toll and DHL rely on CargoWise to execute complex logistics transactions and manage their freight operations from a single platform.

Demonstrating its stickiness, CargoWise boasts an enviable customer retention rate of 99%. In fact, the software platform has recorded less than 1% customer attrition every year for the last 10 years.

Due to the nature of the product, it’s no surprise that a large majority of WiseTech’s revenue is recurring. This figure sat at 89% in FY22, contributing to WiseTech’s stable and predictable revenue streams. 

Xero Limited (ASX: XRO)

Next up is Xero, a pioneer of cloud-based accounting software that plays an integral role in the operations of its small to medium-sized business customers.

Xero is best known for its bookkeeping solution. But it can also handle everything from invoicing and payroll to inventory, quotes, and purchase orders.

This entrenches Xero into its customers’ workflows, adding more value than the monthly subscription fees it extracts.

These subscription fees have only been heading higher over time, with minimal effect on customer retention. In other words, Xero has flexed its pricing power to great effect, with a consistent stream of new features also helping customers to stomach the steeper fees.

In Xero’s most recent 1H23 results, the ASX 200 tech share reported average revenue per user (ARPU) of NZ$35.30, up from NZ$31.32 in the prior corresponding period. Meanwhile, churn remained stable at 0.91% of monthly recurring revenue.

As I’ve highlighted previously, I believe Xero is a business with terrific unit economics.

Altium Limited (ASX: ALU)

Altium rounds out this trio of ASX 200 tech shares that provide mission-critical products.

Coincidentally, all three of these companies are part of the once-infamous ‘WAAAX’ group of ASX tech shares.

Altium provides software for the design of printed circuit boards (PCBs). 

PCBs are those little boards (most commonly green in colour) that house a bunch of electronic components, such as chips and resistors.

These boards sit inside almost every electronic device, from cars and home appliances to mobile phones and manufacturing equipment. 

As you can imagine, there are a lot of intricacies involved in designing a board that mechanically supports and electrically connects a range of different components. 

This is where a PCB design software tool, such as Altium’s flagship Designer product, enters the fray. 

Altium considers Designer as the default software tool of choice for electrical engineers, from those studying at university to those working at world-class companies, such as Tesla Inc (NASDAQ: TSLA) and ResMed CDI (ASX: RMD).

So not only is Altium Designer a mission-critical product, but it’s also an industry-leading tool that benefits from a reinforcing loop. University students are trained to use Altium’s products, and companies require their engineers to be proficient with these products, which only reinforces Altium’s prominent position.

The post 3 ASX 200 tech shares with mission-critical products appeared first on The Motley Fool Australia.

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More reading

• The Xero share price tumbled 50% in 2022. Can 2023 bring a recovery?
• My top predictions for ASX 200 shares in 2023
• 5 things to watch on the ASX 200 on Monday
• Can ASX tech shares rise from the ashes in 2023?
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Cathryn Goh has positions in Altium, ResMed, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, ResMed, Tesla, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended ResMed, WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end its winning streak. At the time of writing, the benchmark index is down 0.2% to 7,137.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price is down 8% to 67.5 cents. This follows news that the semiconductor company is raising funds. Brainchip is issuing US based alternative investment group LDA Capital with 30 million shares at a discount to be decided in the future. Brainchip also wants the option to issue an additional 10 million shares, but this will be subject to approval. LDA is not required to hold the shares and can sell them for a quick profit.

Insurance Australia Group Ltd (ASX: IAG)

The IAG share price is down 3.5% to $4.57. Investors have been selling this insurance giant’s shares since the announcement of its 2023 reinsurance program on Monday, which revealed a jump in reinsurance prices. In response, this morning Morgan Stanley retained its underweight rating and $4.20 price target on its shares.

Premier Investments Limited (ASX: PMV)

The Premier Investments share price is down almost 5% to $24.98. The catalyst for this has been the retail conglomerate’s shares trading ex-dividend this morning for its upcoming dividend payment. The Peter Alexander and Smiggle owner declared a fully franked final and special dividend totalling 79 cents per share with its full year results. This will be paid to eligible shareholders later this month on 25 January.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix share price is down a further 5% to $6.52. Investors have been selling this radiopharmaceuticals company’s shares this week following the release of a trading update. Although Telix reported a 39% quarter on quarter increase in unaudited revenue to $76.8 million, investors appear to have been expecting a stronger performance.

The post Why Brainchip, IAG, Premier Investments, and Telix shares are sinking today appeared first on The Motley Fool Australia.

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More reading

• Here’s why the Brainchip share price is sinking 6% today
• 5 things to watch on the ASX 200 on Tuesday
• Why AMP, Computershare, IAG, and Telix shares are dropping today
• Here are the top 10 ASX 200 shares today
• ASX 200 tech shares are leading the market higher today

Motley Fool contributor James Mickleboro has positions in Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Insurance Australia Group. The Motley Fool Australia has recommended Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Time to get personal. Like many, if not most, investors, 2022 was a tough year for my ASX shares. With the S&P/ASX 200 Index (ASX: XJO) losing 5.5% last year, it was always going to be hard for an ASX portfolio to break even.

But I still had more than a few winners helping to offset some of the losses in my portfolio. So I shall now reveal my top three best-performing ASX shares of 2022, and why I reckon they will continue to be winners in 2023.

My top 3 ASX shares of 2022

National Australia Bank Ltd (ASX: NAB)

NAB is an ASX share that needs little introduction. It is now the second-largest ASX bank share on the market by market capitalisation, only behind Commonwelath Bank of Australia (ASX: CBA). NAB is one of my oldest investments, and I have been loath to sell it before out of pure, foolish nostalgia.

But these days, I am quite happy to hold it as one of my investments, helped by the 4.2% share price gain I enjoyed last year. That came with a healthy dividend too, which boosted my returns by another 7% or so.

I have been impressed with the business’ performance since CEO Ross McEwan took over a few years ago and I think NAB will prove a solid investment in 2023 and beyond accordingly.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is a newer position of mine. I was fortunate enough to buy some shares when this company was really on the nose back in October.

Since then, I have enjoyed double-digit gains on my position, with my only regret being that I didn’t buy more. That’s despite the Wesfarmers share price losing more than 22% of its value over the entire calendar year.

I think Wesfarmers is one of the top-tier ASX shares on our market. It has an incredibly diverse earnings base, with stakes in a wide range of retail and industrial businesses.

Its crown jewel Bunnings is one of the best-run retailers in the country too. Accordingly, this is a company that I have no plans to ever sell.

A2 Milk Company Ltd (ASX: A2M)

A2 Milk rounds out my top performers of 2022. A2 Milk shares had a pretty great year last year, considering the returns of the broader market.

This company enjoyed a 26% or so rise over 2022, which makes it my best-performing ASX share of the year. We can probably thank improving business conditions, as well as China’s moves towards reopening, for these gains.

Unfortunately, I bought A2 Milk shares back in 2021 and, even after these healthy gains, I am still underwater. But even so, it’s been nice to see such a spirited recovery for this embattled share.

I think A2 still has a lot of potential and I think 2023 will be another great year for this former market darling.

The post My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023 appeared first on The Motley Fool Australia.

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More reading

• Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth
• Why 2023’s stock market could offer me once-in-a-generation returns
• Want 17% upside plus dividend income? Broker says buy Wesfarmers shares
• Can ASX bank shares deliver in 2023 after higher interest rates?
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Sebastian Bowen has positions in A2 Milk, Wesfarmers and National Australia Bank. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, Telstra Group Ltd (ASX: TLS) shares have dropped with the market.

At the time of writing, the telco giant’s shares are down slightly to $3.97.

This means the Telstra share price is now down approximately 4.5% since this time last year.

While this may be a little disappointing for shareholders, it could have created a buying opportunity for the rest of us.

That’s the view of the team at Morgans, which has the company on its best ideas list with an add rating and $4.60 price target on its shares.

Based on where Telstra shares are trading today, this suggests potential upside of approximately 16% for investors over the next 12 months.

But the returns don’t stop there! Far from it, Morgans is expecting Telstra to pay another 16.5 cents per share fully franked dividend in FY 2023. This represents a healthy 4.15% dividend yield at current prices.

Why should you buy Telstra shares?

Morgans believes that Telstra shares are worth far more than their current market value. This is due largely to its “strong earnings momentum and a strong balance sheet”, as well as its recent legal restructure.

Its analysts highlight that the latter, which has recently been approved by shareholders, could unlock value. It explained:

TLS currently trades on ~7x EV/EBITDA. However some of TLS’s high quality long life assets like InfraCo are worth substantially more, in our view. We don’t think this is in the price so see it as value generating for TLS shareholders. This, free option, combined with likely reputational damage to its closest peer, following a major cybersecurity incident, means TLS looks well placed for the year ahead.

Overall, this could make Telstra a top blue chip option for investors in 2023.

The post Can Telstra shares deliver 16% upside AND a healthy dividend this year? appeared first on The Motley Fool Australia.

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More reading

• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?
• Buy Telstra and this ASX 200 dividend share for income in 2023: brokers
• Here’s how I plan to recession-proof my ASX share portfolio this year
• Telstra shares fell short in 2022. Can they deliver in 2023?
• 23 ASX shares to buy in 2023 – brokers

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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These two ASX mining shares could have significant upside according to analysts.

Argosy Minerals Ltd (ASX: AGY) and Musgrave Minerals Ltd (ASX: MGV) share prices are both tipped to charge higher.

Let’s take a look at these two ASX mining shares in more detail.

Argosy Minerals

Argosy Minerals is a lithium miner developing the Rincon Lithium Project in Argentina. The company’s shares are 0.45% in the red today and currently fetching 65.3 cents.

Analysts at Canaccord Genuity have placed a speculative buy rating on Argosy Minerals shares with a price target of 85 cents. This implies a 30% upside. Analysts noted Argosy has produced maiden battery quality lithium carbonate at the Rincon project, commenting:

The production of 99.76% lithium carbonate (250kgs) represents a significant validation of its production process, in our view.

In 2023, the team at Canaccord believe Argosy “is likely” to deliver on multiple fronts that could unlock value for shareholders. These include first sales of lithium product, customer offtake agreements, the ramp-up of the two kilo tonnes per annum (ktpa) plant, resource and reserve updates and a final investment decision and financing of the 10 ktpa plant. Analysts added:

We value AGY using a 50:50 NAV:five-year average EBITDA with a multiple of 7.5. We use US$22,500 per tonne for our lithium price and USD/AUD of 0.75.

Musgrave Minerals

Musgrave Minerals is a gold explorer developing the Cue Project in Western Australia. The company’s shares are down 2% today and are currently fetching 22 cents.

Argonaut equity research has placed a speculative buy rating on Musgrave with a 40 cent price target. This implies an upside of 82% based on the current share price. Analyst Royce Haese highlighted the “rare nature” of high-grade, near surface gold deposits in WA.

Commenting on Musgrave, Haese said:

Updated met results exceed our expectations and granting of mining leases is another tick towards development.

On our modelling we bump up our assumed average project metallurgical recovery from 92% to 93%, retaining plenty of conservatism. We still assume processing through Dalga. Our valuation improves slightly to $0.40 per share, prior $0.38.

The post Buy these 2 ASX mining shares with over 30% upside: brokers appeared first on The Motley Fool Australia.

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More reading

• Why Argosy Minerals, Block, Essential Metals, and Resolute shares are storming higher
• This ASX 300 lithium share boomed in 2022, and still has 30% upside: broker
• These were the 3 best performing ASX lithium shares of 2022
• 3 ASX All Ordinaries shares up by more than 60% in 2022
• Why Argosy Minerals, Arafura, Deep Yellow, and Pro Medicus shares are charging higher

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Welcome to 2023! It might be a good year for investors so far, with the S&P/ASX 200 Index (ASX: XJO) now up more than 2.7% year to date. But that is probably cold comfort for those of us starting 2023 with no savings. If that’s you, never fear. The wise words of Warren Buffett can be a great place to start building wealth, no matter your age.

The legendary investor Warren Buffett may be in his 90s but he is still regarded as one of the best investors in the world. His holding company Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) has navigated the stormy waters of the past two years with aplomb, and its shares are now sitting at 40% above its pre-COVID highs.

So what would Buffett’s first piece of advice for someone with no savings be? I would bet he’d repeat this advice he gave once: “Do not save what is left after spending, but spend what is left after saving”.

You can’t invest for your future if you have no savings to start with. And consistently building up a healthy savings account starts with spending less money than you earn. You simply can’t get ahead unless you master this skill.

But once you have a healthy pile of savings squirrelled away for a rainy day, what does one do next?

How Warren Buffett tells most people to invest

Well, Buffett would tell you to start investing, since cash has proven to be a poor store of value over a long period of time.

Warren Buffett is well known for his value investing style. He loves finding companies that are trading for less than what he sees they are worth. One of his most famous quotes is “price is what you pay, value is what you get”.

Buffett loves buying quality companies when they are on the nose with most other investors. Some of his biggest positions were built out when a company had a temporary fall in value.

But what if figuring out what an investment is worth is not your strong suit? Well, Buffett reckons most people would be better off just investing in a simple index fund anyway.

In 2017, he told CNBC that investors should “consistently buy an S&P 500 low-cost index fund” and “keep buying it through thick and thin, and especially through thin”.

So that’s some of Warren Buffet’s wisdom that I think would be of most use to a would-be investor starting 2023 with no savings. Investing takes a long time to bear fruit. But when it does, you’ll be glad you started.

The post Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth appeared first on The Motley Fool Australia.

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More reading

• Why 2023’s stock market could offer me once-in-a-generation returns
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Will 2023 bring gains for ASX 200 shares? Here’s what Citi is forecasting

Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last year was dismal for the Australian stock market. Indeed, the S&P/ASX 200 Index (ASX: XJO) posted its second-largest annual loss of the last decade, falling 5.45% over the course of 2022.

Fortunately, there’s likely a silver lining to the market’s mayhem. I believe the downturn has brought about a once-in-a-generation opportunity to realise major returns.

Taking Buffett’s advice in 2023

Last year brought soaring inflation, multiple interest rate hikes, and a war in Ukraine, all of which contributed to a tumultuous year on the ASX. And such factors haven’t abated yet.

But I’m still following the advice of investing great Warren Buffett. The billionaire once told investors:  

[W]e simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

And that’s how I plan to approach the stock market in 2023.

When most market participants are fearful, quality shares are more likely to trade below fair value amid low expectations. Of course, the cheaper one buys a value share, the larger their potential returns.

Though, it’s worth noting no investment is guaranteed to provide gains or downside protection.

Looking back on the 2018 downturn

2018 was this decade’s worst year for the Australian stock market. The ASX 200 plummeted 6.9% that year amid a trade war between the United States and China, the Banking Royal Commission, and a rough reporting season.  

No doubt, then, investors who entered 2019 particularly wary were surprised by the market’s recovery. The ASX 200 jumped a whopping 18.4% that year – likely putting a smile back on investors’ faces.

Of course, 2023 probably won’t shape up like 2019. While this year looks like it could be better for investors, key economists aren’t expecting a jaw-dropping recovery.

For starters, interest rates are tipped to grow further this year amid a continuing battle against inflation. Additionally, there are more questions than answers as to the end of the war in Ukraine.

But, it is likely some quality shares were dragged down in the ASX’s 2022 calamity. And I think some could be ripe to provide once-in-a-generation returns in the years to come.

Where I’ll be searching for stock market winners in 2023

Of course, not all stocks bruised by 2022 will prove to be future winners.

However, the disparity in ASX 200 sectors’ recent performances has likely provided a once-in-a-generation point to begin searching for diamonds in the rough.

For instance, while the market was buoyed by S&P/ASX 200 Energy Index (ASX: XEJ) stocks, many S&P/ASX 200 Real Estate Index (ASX: XRE) shares suffered. The real estate sector fell 24% over the year to 31 December.  

The S&P/ASX 200 Information Technology Index (ASX: XIJ) and the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) could also house future winners. They tumbled 34% and 23% respectively last year.

Though, it’s also possible that the market could continue sliding in 2023. Particularly, given predictions of global recessions and the potential for more unexpected and unfortunate happenings.

The post Why 2023’s stock market could offer me once-in-a-generation returns appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Will 2023 bring gains for ASX 200 shares? Here’s what Citi is forecasting
• Mineral mania: 5 ASX 200 mining shares smashing new highs on Monday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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