"There are a number of valid reasons why many investors may be souring on the ability of equity markets to continue to rise at a 20%+ rate in the years to come. Indeed, it's been an impressive run for investors in the stock market in recent years, with such outsized gains becoming the norm. That's not typically the case, with stocks rising an average of between 7% and 10% on a given year."
"That said, there are plenty of bulls who contest that earnings are growing fast, particularly for those companies driving the majority of returns in the market right now. And given the number of defensive stocks in the market which are trading at reasonable multiples, there are places to hide for those looking to stay invested (but do so in a more conservative way)."
"Berkshire Hathaway (BRK-B) is perhaps the "bluest" of all blue-chip stocks in the market, at least in my view. Known as the "Oracle of Omaha," Buffett has an absolutely incredible track record of picking companies near the bottom of some longer-term cycle, and holding these stocks through various cycles toward their all-time highs. He's focused a great deal of his attention on companies and industries he can understand (such as insurance, financials, railroads, etc.), and he's made a ton of money doing so."
Equity markets have recently delivered outsized returns, often exceeding 20% annually, well above the historical average of 7–10% per year. Many investors worry a sustained surge is unsustainable and expect a future selloff. Other investors argue that strong earnings growth, concentrated among market leaders, supports continued gains. Several defensive, blue-chip stocks trade at reasonable multiples and offer lower-risk exposure. Berkshire Hathaway exemplifies such names: it focuses on cash-flowing, brand-leading businesses in concentrated markets and buys sizable stakes in understandable industries, providing stability for lower-risk portfolios.
Read at 24/7 Wall St.
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