The BHP Group Ltd (ASX: BHP) share price was in a state of decline during the first trading day of this week.

As the electronic gates slammed shut on the Aussie share market this afternoon, BHP shares finished markedly lower. To be specific, the mining giant rolled its way 2.6% downhill to $39 apiece. For context, the S&P/ASX 200 Index (ASX: XJO) took a 1.4% walk into the red on Monday.

What can be attributed to this disappointing move for BHP shareholders?

Iron ore or iron snore?

The BHP share price took a back seat on Monday as investors went cold on commodity-exposed areas of the ASX. Overall, the materials sector slipped 2.3% lower, making it the worst-performing sector.

Today’s negative movement could be tied to the price of iron ore sinking to its lowest level since late 2021. According to Trading Economics, the steelmaking commodity is now fetching around US$96 per tonne, putting it on par with prices witnessed in November 2021 — as shown below.

Downward pressure on commodities, particularly iron ore, has been mounting amid tightening monetary policy. As global economies take action to try and curb inflation, commodities linked to economic growth have been caught in the crosshairs.

Notably, the fall in the BHP share price — and other ASX 200 mining shares — follows remarks out of China suggesting a sustained commitment to the zero COVID-19 policy. Hence, markets might have been nervous about the knock-on impacts on the likes of the steel industry.

Today’s further degradation in iron prices marks the fifth consecutive week of declines.

Could the BHP share price be attractive?

With BHP shares trading roughly at the same price they were a year ago, some investors might be wondering whether the could be value is dipping into the mining company now.

Well, analysts at Morgans tend to think so, with an add rating currently held on the $198 billion behemoth. Morgans believe BHP holds a low-risk profile and has strong free cash flow generation.

For those reasons, the team has a $47.40 share price target on the BHP share price.

The post Why did the BHP share price melt down on Monday? appeared first on The Motley Fool Australia.

More reading

• Opportunities across the mining sector: Expert names ASX 200 shares to buy
• Top brokers name 3 ASX shares to buy next week
• If I’d invested $5,000 in these 5 ASX shares five years ago, here’s what I’d have now
• Do you want the good news or the bad news on the iron ore price?
• Morgans names the best ASX resources shares to buy now

Motley Fool contributor Mitchell Lawler 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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The All Ordinaries Index (ASX: XAO) share price struggled to gain traction on Monday, slumping 1.36% to close Monday’s session at 6,854.30 points. But not all All Ords shares suffered alongside the benchmark index.

Some posted gains of as much as 11%.

So, which ASX All Ords shares outperformed and what drove them to defy the market’s downturn? Keep reading to find out.

These ASX All Ords shares defied today’s downturn

The first ASX All Ords share posting a notable gain on Monday was Electro Optic Systems Holdings Ltd (ASX: EOS). The company’s stock soared 5.94% today to close at 53.5 cents.

Interestingly, there was no price-sensitive news from Electro Optic Systems on Monday. However, the market was informed of an S&P/ASX 200 Index (ASX: XJO) giant’s move to up its stake in the tech company.

Washington H Soul Pattinson and Co Ltd (ASX: SOL) has increased its holding in the company to 9.95%, according to an ASX release. The ASX 200 giant previously boasted 6.21% of the company’s voting power.

Fellow All Ords share Elmo Software Ltd (ASX: ELO) also posted a 1.67% gain on Monday. The cloud-based human resources and payroll software provider’s stock closed the day at $3.05.

Once again, there was no news from the company on Monday. However, only last week, Elmo revealed it had been approached by a party interested in striking an acquisition deal.

Finally, shares in ASX All Ords memory technology developer Weebit Nano Ltd (ASX: WBT) soared 11.32% to close Monday at $2.36.

As seems to be the pattern, there’s been no word to explain its upwards trajectory. Today’s gain sees it trading at its highest point since mid-September.

The post It wasn’t all bad news for ASX All Ords shares on Monday. Here are some big winners appeared first on The Motley Fool Australia.

More reading

• Top broker says opportunities abound for ‘high quality’ ASX shares
• 3 ASX All Ords shares smashing multi-year highs on Friday
• Why Atlantic Lithium, Elmo, Qantas, and Westpac shares are pushing higher
• Elmo share price explodes 29% on possible takeover
• 2 ASX defence shares soaring on big news today

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 Electro Optic Systems Holdings Limited, Elmo Software, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Elmo Software and Washington H. Soul Pattinson and Company Limited. 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 S&P/ASX 200 Index (ASX: XJO) started the week out on the wrong foot. It fell 1.4% on Monday to close at 6,664.4 points.

It followed a similarly disappointing Friday on Wall Street wherein the Dow Jones Industrial Average Index (DJX: .DJI) fell 1.3%, the S&P 500 Index (SP: .INX) dumped 2.4%, and the Nasdaq Composite Index (NASDAQ: .IXIC) plummeted 3.1%.

The S&P/ASX 200 Materials Index (ASX: XMJ) led the Aussie bourse’s fall today, plunging 2.1%.

Meanwhile, oil prices likely weighed on the S&P/ASX 200 Energy Index (ASX: XEJ) today. It also fell 2.1% on Monday.

The Brent crude oil price fell 3.1% to US$91.63 a barrel on Friday while the US Nymex crude oil price dropped 3.9% to reach US$85.61 a barrel.

The S&P/ASX 200 Real Estate Index (ASX: XRE) was the market’s best-performing sector, falling just 0.6%. The S&P/ASX 200 Communications Index (ASX: XTJ) also outperformed most others, dumping 0.7%.

But which ASX 200 share topped all its peers on Monday? Keep reading to find out.

Top 10 ASX 200 shares countdown

The best-performing ASX 200 share on Monday was lithium favourite Core Lithium Ltd (ASX: CXO).

It gained 5.2% amid news its managing director is stepping down earlier than expected and reports that Chinese lithium prices reached a new high.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Core Lithium Ltd (ASX: CXO)	$1.215	5.19%
Liontown Resources Limited (ASX: LTR)	$1.715	4.89%
News Corporation Limited (ASX: NWS)	$26.84	3.63%
Telix Pharmaceuticals Ltd (ASX: TLX)	$5.59	3.33%
Lake Resources N.L. (ASX: LKE)	$1.005	3.08%
Brickworks Limited (ASX: BKW)	$22.25	2.49%
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)	$17.11	2.46%
Pilbara Minerals Ltd (ASX: PLS)	$4.79	2.13%
Megaport Ltd (ASX: MP1)	$7.86	2.08%
Insurance Australia Group Ltd (ASX: IAG)	$4.89	1.56%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• Why Baby Bunting, Brickworks, Core Lithium, and Dreadnought Resources are pushing higher
• Why are these ASX 200 lithium shares smashing it on Monday?
• Star Entertainment share price halted amid $100m fine and casino license suspension
• 3 ASX 200 shares that turned a $5,000 investment into $1 million
• IAG share price takes centre stage on $350 million buyback news

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 Brickworks and MEGAPORT FPO. The Motley Fool Australia has positions in and has recommended Brickworks and Insurance Australia Group Limited. The Motley Fool Australia has recommended MEGAPORT FPO. 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 Bank of Queensland Ltd (ASX: BOQ) share price ran out of steam on Monday. The regional bank’s shares ended the day almost 1% lower at $7.67.

Despite this, the Bank of Queensland share price is still up over 12% since this time last week.

Investors have been scrambling to buy the bank’s shares since the release of its full year results last week.

Although those results were softer than the market was expecting, its exit net interest margin (NIM) caught the eye and got investors excited.

Can the Bank of Queensland share price keep rising?

The good news is that the team at Citi believe there’s still plenty of upside ahead for the Bank of Queensland share price.

According to a note, the broker has put a buy rating and $8.75 price target on the bank’s shares. This implies potential upside of 14% for investors over the next 12 months.

And with Citi expecting a 58 cents per share fully franked dividend in FY 2023, which equates to a 7.5% yield, the total potential return stretches to over 21%.

Citi commented:

BOQ delivered FY22 cash earnings of $508m, ~2% below consensus estimates. However, despite the modest miss, the stock materially outperformed the index by ~1100bps. We think that this largely reflected commentary on rates leverage. In our view, consensus has been underestimating the extent of rates leverage across the sector, which coupled with a view that BOQ has less rates leverage than peers. This had left very modest NIM expectations for FY23.

Today, management dispelled these modest expectations, with bullish commentary on the exit NIM. While costs were a slight disappointment, proportionally they will be much less than revenue upgrades, and as a result we think consensus moves higher. We think BOQ’s metrics in its strategy day look challenged, reflecting the abnormally low starting point for BDDs, an uncertain outlook for macro factors as well as execution risk associated with sizable M&A transactions.

The post Here’s what Citi is saying about the Bank of Queensland share price appeared first on The Motley Fool Australia.

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• Top brokers name 3 ASX shares to buy next week
• Why are ASX 200 bank shares having such a top run on Thursday?
• Who’s making money from higher rates? Scott Phillips on Nine’s Late News
• Brokers give their verdict on the Bank of Queensland share price
• 5 things to watch on the ASX 200 on Thursday

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 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 S&P/ASX 200 Index (ASX: XJO) has followed Wall Street’s lead and dropped deep into the red. In afternoon trade, the benchmark index is down 1.4% to 6,662.8 points.

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

Adbri Ltd (ASX: ABC)

The Adbri share price is down 21% to $1.45. Investors have been selling down this building materials company’s shares after it announced the exit of its CEO and released a disappointing trading update. The latter reveals that its profits will be down materially in FY 2022 due to higher costs.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price is down 13% to $2.01. This has been driven by news that Costa’s Citrus operations have been underperforming due to adverse weather. As a result, Costa currently expects its full year group EBITDA-S to be marginally ahead of last year’s results. This compares to strong first half EBITDA-S growth of 12.6%.

Hawsons Iron Ltd (ASX: HIO)

The Hawsons Iron share price is down a whopping 62% to 14 cents. This morning, Hawsons Iron revealed that escalating global costs and deteriorating economic conditions have necessitated a slowdown decision for the Hawsons Iron Project Bankable Feasibility Study. Management believes it would be prudent to preserve capital while examining all options to progress the project.

Medibank Private Ltd (ASX: MPL)

The Medibank share price is down 3.5% to $3.40. Investors have been selling this private health insurance giant’s shares after it was the latest victim of a cyberattack. The good news is that Medibank appears to have responded quick enough to prevent any customer data being taken or ransomware being installed. The company has now deployed additional security measures across its network, strengthening the integrity of its systems.

The post Why Adbri, Costa, Hawsons Iron, and Medibank shares are sinking today appeared first on The Motley Fool Australia.

More reading

• Why did the Hawsons Iron share price just nosedive 62%?
• What caused this ASX 200 share to crash 20% on Monday?
• Medibank share price sinks on cyber incident and trading update
• Why the Costa share price is crashing 14% to a 52-week low
• Medibank shares on ice as details of cyberattack emerge

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 recommended COSTA GRP FPO. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The new inflation numbers that just dropped certainly have the markets worried about the depth of the recession we could be facing. With the S&P 500 index firmly in bear market territory, down 25% year-to-date, investors are rightly nervous about what it means for stocks.

Yet, history shows that bull markets always follow these corrections. And whereas bear markets are measured in months, bull markets are measured in years. That means sharp downturns are actually the best time to buy stocks for the long-term returns generated for your portfolio.  

As Warren Buffett once said, be fearful when others are greedy, and greedy when others are fearful. As long as investors have an appropriate investment horizon — 10 years is usually good — they should not fear bear markets, but look forward to them eagerly as a chance to buy good companies at discounted prices.

If you have $5,000 available, the following two growth stocks are excellent companies to own for years to come.

Apple

Apple (NASDAQ: AAPL) stock is down 22% in 2022 as investors worry about the economy’s impact on consumer spending habits. It’s estimated that App Store sales fell 5% in September, their biggest decline ever, and they are down 2% for the quarter. While that creates near-term headwinds, there is still strong demand for higher-priced iPhone 14 models, and a Piper Sandler survey of teens says Apple’s share of the smartphone market remains near record highs.

One short-term catalyst is Apple’s $90 million stock buyback program, which should help support any earnings weakness. And over the long haul Apple continues striving to  introduce new products, such as virtual reality headsets and the long-awaited Apple Car, which it would like to bring to market by 2025.

While some services like the App Store may see lower revenue in the coming quarters, others like iCloud, AppleCare, and even music ought to keep growing. Product sales are stable too, and because Apple has been able to keep its premium pricing intact as demand maintains its upward trajectory, the macroeconomic pressures on the company won’t be as great as they will be on its lower-end rivals.

Investors might also take comfort in knowing that buying Apple stock at these prices means they will be buying the tech giant at prices cheaper than Warren Buffett got when he made the company 41% of Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) portfolio.

Costco

Another stock buffeted by consumer spending worries is Costco (NASDAQ: COST), whose stock is down 18% this year, and fell again last month despite reporting financial results that beat Wall Street expectations.

Inflation is taking its toll, with September’s numbers coming in hotter than expected. Particularly in the pocketbook items that matter most to consumers — food and fuel — inflation is even higher than the headline print. Utility gas is up 33% over last year, eggs are 30% higher, gas prices are up 18%, chicken 17%, coffee and milk 15% higher, and so on.

Costco has chosen not to raise its membership fees at this time, much to the consternation of some, but that is actually helping drive shoppers to its warehouse clubs and helping to grow sales by double-digit rates. Comparable store sales growth dipped to 8.5% in September, the first time in 28 months they were below 10% (they were still up over 11% in the U.S.). It proves bulk buying of goods is a smart choice in this high-cost period, even if it doesn’t fully insulate the retailer from the ravages of inflation. Gross margins, for example, were 10.5%, down from 11.1%, in fiscal 2021.

However, memberships remain a source of strength for Costco, and consumers are still flocking to the warehouse club. It ended its fiscal fourth quarter last month with 118.9 million cardholders, of which 53.1 million were household members, up 6.5% from last year.

While the economy can always get worse, Costco’s results show the soundness and stability of its business model. It should carry the retailer through the tough times, which makes its stock a solid choice for an investor willing to buy and hold for the long haul. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post $5,000 invested in these US stocks could make you rich over the next 10 years appeared first on The Motley Fool Australia.

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• Will Amazon stock be worth more than Apple by 2025?
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• Why Apple stock plunged today

Rich Duprey 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 Apple and Costco Wholesale. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a sizeable decline. At the time of writing, the benchmark index is down 1.4% to 6,662.8 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are pushing higher:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price is up over 2% to $2.74. This appears to have been driven by a broker note out of Morgans today. According to the note, the broker believes that recent share price weakness has created a buying opportunity. Morgans has retained its add rating with a reduced price target of $3.60.

Brickworks Limited (ASX: BKW)

The Brickworks share price is up 2.5% to $22.25. Investors have been buying this building products company’s shares after it was the subject of a bullish broker note. According to a note out of UBS, its analysts have upgraded Brickworks’ shares to a buy rating with a $25.30 price target. The broker made the move after increasing its earnings estimates materially for FY 2023.

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is up 5% to $1.21. This morning Core Lithium revealed that its managing director Stephen Biggins will step down with immediate effect. With the recent official opening of the Finniss Lithium Mine and appointment of Gareth Manderson as CEO, Biggins has decided it is the appropriate time to exit. Rising lithium prices have also given its shares a boost.

Dreadnought Resources Ltd (ASX: DRE)

The Dreadnought Resources share price is up 5% to 10 cents. This follows the release of an update on drilling activities at the 100% owned Mangaroon project. According to the release, the company has intersected thick rare earth mineralisation in both fresh and weathered material. Managing Director, Dean Tuck, commented: “We are already off to a good start so the next few months should be extremely exciting.”

The post Why Baby Bunting, Brickworks, Core Lithium, and Dreadnought Resources are pushing higher appeared first on The Motley Fool Australia.

More reading

• Why are these ASX 200 lithium shares smashing it on Monday?
• Leading brokers name 3 ASX shares to buy today
• Why is Core Lithium share price outperforming the ASX 200 today?
• Dividend beasts: Experts name 3 ASX dividend shares that could deliver 50% returns next year
• What’s the outlook for ASX battery metals shares in Q2?

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 positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. The Motley Fool Australia has recommended Baby Bunting. 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 S&P/ASX 200 Index (ASX: XJO) is having a rough start to the week, but shares involved with one particular material are defying its downturn – lithium.

ASX lithium stocks are leading the index on Monday. Here’s how some of the market’s favourites are tracking:

• The Liontown Resources Limited (ASX: LTR) share price is leading the way, gaining 5.81%
• Core Lithium Ltd (ASX: CXO) is next best, lifting 5.41%
• Lake Resources NL (ASX: LKE) stock has gained 2.26%
• Shares in Sayona Mining Ltd (ASX: SYA) are also up 0.91%
• The Pilbara Minerals Ltd (ASX: PLS) share price, meanwhile, has risen 0.85%

For comparison, the ASX 200 has tumbled 1.45% at the time of writing while the S&P/ASX 200 Materials Index (ASX: XJO) – home to the market’s biggest lithium shares – has fallen 2.38%.

So, what might be driving ASX 200 lithium shares higher on Monday? Let’s take a look.

What’s going right for ASX 200 lithium shares?

All eyes are on the market’s biggest lithium names on Monday as they defy a broader market downturn despite next to no news being released.

However, the value of the battery-making material is said to have hit a new record high.

Chinese lithium prices hit $117,125.64 per tonne today, The Australian reports.

The new peak comes amid rising demand for electric vehicles, driving the call for the lithium needed to make them. Of course, higher lithium prices are generally good news for lithium producers’ bottom lines.

It’s also worth noting it hasn’t been total silence among ASX 200 lithium shares today.

Core Lithium announced its managing director Stephen Biggins’ immediate resignation this morning. Biggins previously planned to stick out the year at the company.

Additionally, not all ASX 200 lithium shares are in the green right now.

The Allkem Ltd (ASX: AKE) share price is down 1.51% at the time of writing.

Meanwhile, those of IGO Ltd (ASX: IGO) and Mineral Resources Limited (ASX: MIN) have fallen 2.15% and 3.13% respectively.

The post Why are these ASX 200 lithium shares smashing it on Monday? appeared first on The Motley Fool Australia.

More reading

• Star Entertainment share price halted amid $100m fine and casino license suspension
• 3 ASX 200 shares that turned a $5,000 investment into $1 million
• Why is Core Lithium share price outperforming the ASX 200 today?
• Why is the Endeavour share price having such a great start to the week?
• Is the company’s buyback helping boost the AMP share price?

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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Baby Bunting Group Ltd (ASX: BBN)

According to a note out of Morgans, its analysts have retained their add rating but slashed their price target on this baby products retailer’s shares to $3.60. While Morgans was disappointed with the company’s recent trading update, it feels the significant share price weakness since the release has created a buying opportunity for investors. Especially given its belief that Baby Bunting has plenty of growth opportunities ahead of it. The Baby Bunting share price is trading at $2.73 this afternoon.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

A note out of UBS reveals that its analysts have retained their buy rating and $85.00 price target on this pizza chain operator’s shares. This follows the release of an update from its US based parent which showed promising same store sales trends globally. In addition, the broker believes that Domino’s is well-placed in the current environment due to its value offering. The Domino’s share price is fetching $56.94 today.

National Australia Bank Ltd (ASX: NAB)

Analysts at Macquarie have upgraded this banking giant’s shares to an outperform rating with an improved price target of $32.25. According to the note, Macquarie has lifted its earnings estimates for the big four banks to reflect margin improvements thanks to higher interest rates. However, the broker sees NAB as the best bank to buy at the moment. In fact, it is the only big four bank that it is positive on. The NAB share price is trading at $30.82 on Monday.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Dividend beasts: Experts name 3 ASX dividend shares that could deliver 50% returns next year
• Here are 2 blue chip ASX 200 shares to add to your portfolio: brokers
• Here are the top 10 ASX 200 shares today
• NAB share price lifts amid ‘first for a major Australian bank’

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 recommended Baby Bunting and Dominos Pizza Enterprises Limited. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Since buying his first stock at age 11, Warren Buffett has amassed $90 billion in wealth and become one of the best-known figures in finance. Buffett’s ability to pick winning investments is nothing short of extraordinary, and Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has achieved immense success under his leadership. In fact, Berkshire stock skyrocketed more than 3,600,000% between 1964 and 2021, and Buffett had racked up more than $177 billion in unrealized gains through Berkshire’s portfolio as of June 30, 2022.

With credentials like that, it’s no surprise that Buffett has become a legend in his own time. Upward of 40,000 people flock to Nebraska each year to attend the annual Berkshire shareholders meeting, eager to hear Buffett — known as the ‘Oracle of Omaha’ — share his thoughts on investing philosophy and the broader economy.

Naturally, Buffett has offered up many pearls of wisdom over the years, but one piece of advice is particularly relevant right now.

Warren Buffett made a big bet in 2007 (and won)

Buffett issued a challenge to the investing world in December 2007. He wagered $500,000 that no professional investor could select a set of five hedge funds — actively managed investment products with high fees — that would outperform a passively managed S&P 500 index fund over the following 10 years.

Only one advisory firm, Protégé Partners, accepted that challenge. The firm tasked five professional investors (each of whom employed dozens of investing experts) with managing one hedge fund a piece. In total, Protégé had 200-plus hedge fund managers bent on beating Buffett.

The bet started in January 2008 — as the S&P 500 was collapsing under the weight of the Great Recession, an event that ultimately erased 56% of its value — and it ran through December 2017. Buffett emerged victorious, and he won by a wide margin. The S&P 500 delivered a total return of 125.8% during that period, while the best-performing Protégé fund was up just 87.7%. It’s worth noting the worst-performing Protégé fund did so poorly it was liquidated in 2017.

An S&P 500 index fund is a great option for most investors

Investors can learn a lot from that story. Buffett beat hundreds of highly-trained professional investors, and he beat them without doing any work. A passively-managed S&P 500 index fund simply mirrors the composition (and, therefore, tracks the performance) of the S&P 500. Meanwhile, Protégé had hundreds of hedge fund managers actively buying and selling investments throughout the 10-year period. They did a lot of work and they achieved a worse result.

That anecdote explains why Buffett has consistently recommended a low-cost S&P 500 index fund for most investors. In 2017, he urged investors to “keep buying [an S&P 500 index fund] through thick and thin, and especially through thin.”

That advice is still relevant today — in fact, it’s especially relevant in this challenging environment. High inflation and rising interest rates have sent the stock market tumbling, and the S&P 500 is currently 25% off its high. That puts the index in a bear market, or a clear example of the “thin” times Buffett previously mentioned, and investors would do well to take Buffett’s advice regarding an S&P 500 index fund.

Another option for investors

Over the past decade, Berkshire Hathaway stock has virtually mirrored the performance of the S&P 500. But Berkshire stock has a five-year beta of 0.89, meaning it tends to rise and fall less dramatically than the overall market. That makes Berkshire stock a reasonable investment option for Buffett fans who find an S&P 500 index fund a little too volatile.

Berkshire has accumulated a number of businesses that operate across several critical industries, including insurance company GEICO, railway operator Burlington Northern Santa Fe, and industrial specialists Precision Castparts and Lubrizol, among others. Berkshire also owns 92% of Berkshire Hathaway Energy, which itself has several subsidiaries involved in electricity and natural gas utilities.

That diversification makes Berkshire financially resilient. Case in point: It has increased free cash flow per share at 6% annually over the past 15 years, despite weathering a couple of recessions during that time. Of course, no company is immune to an economic downturn, but Berkshire’s resilience is an advantage in the current environment.

In addition, the company has more than $105 billion in cash and short-term investments on its balance sheet. That war chest leaves Buffett with plenty of capital to deploy should he come across any bargain investments in the bear market.

Of course, investors don’t have to choose between an S&P 500 index fund and Berkshire. It’s OK to own both — I doubt Buffett would disapprove.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Looking for the best stocks to buy in a bear market? Here’s Warren Buffett’s advice appeared first on The Motley Fool Australia.

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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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