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It's been a volatile 2022 for the stock market, including bear market dips that have certainly tested investors' mettle. But when looking for the best stocks to buy, investors should consider long-term performance, not short-term volatility. To help with that, we've compiled a list of the best stocks in the S&P 500, measured by year-to-date return.
These stocks have continued to post solid gains over the past year, despite an overall falling stock market.
» Learn more: How to invest in stocks
Best-performing stocks as of October 2022
Price Performance (This Yr)
Occidental Petroleum Corp.
Marathon Petroleum Corp.
Enphase Energy Inc.
Exxon Mobil Corp.
Valero Energy Corp.
Marathon Oil Corp.
Coterra Energy Inc.
Devon Energy Corp.
CF Industries Holdings Inc.
Nielsen Holdings plc
Vertex Pharmaceuticals Inc.
Cardinal Health Inc.
EOG Resources Inc.
The Mosaic Company
Lamb Weston Holdings Inc.
Northrop Grumman Corp.
This data is current as of Oct. 3, 2022, and is intended for informational purposes only.
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Are these the best stocks to invest in right now?
Not necessarily. Just because these are the best-performing stocks in the S&P 500 this month, doesn't mean that they're the best stocks to invest in. Predicting the future of even the current top-performing stocks is a job even the pros haven’t yet mastered. And the best stocks for your portfolio aren’t necessarily the best stocks for someone else’s portfolio.
For example, a young person who is looking to grow their retirement savings aggressively might gravitate toward growth stocks for their high-risk, high-reward volatility. On the other hand, a retiree who is looking for passive income might prefer the dividend aristocrats, which are relatively stable and have a history of consistently growing their dividend payments over time.
But if you don't want to put in the work to build a customized portfolio of individual stocks, there is an easier approach ...
The answer for many: index funds
Picking stocks is difficult, which is why many investors turn to index mutual funds and exchange-traded funds, which bundle many stocks together.
When individual stocks come together into a diversified portfolio via index funds, they have a lot of power: The S&P 500 index — which includes approximately 500 of the largest publicly traded companies in the U.S. — has posted an average annual return of nearly 10% since 1928.
An S&P 500 index fund or ETF will aim to mirror the performance of the S&P 500 by investing in the companies that make up that index. Likewise, investors can track the DJIA with an index fund tied to that benchmark. If you want to cast a wider net, you could purchase a total stock market fund, which will hold thousands of stocks.
Within an index fund, the winners balance out the losers — and you don’t have to forecast which is which. That’s why many financial advisors think low-cost index funds and exchange-traded funds should form the basis of a long-term portfolio.
» Learn more: How to invest in index funds
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Index funds won’t beat the market. They aren’t supposed to. An index fund’s goal is to match the returns posted by its benchmark — for an S&P 500 fund, that benchmark is the S&P 500. There are index funds that track a range of underlying assets, from small-cap stocks, to international stocks, bonds and commodities such as gold.
Index funds are inherently diversified, at least among the segment of the market they track. Because of that, all it takes is a few of these funds to build a well-rounded, diversified portfolio. They’re also less risky than attempting to pick a few could-be winners out of a lineup of stocks.
The downside: Some might argue they’re significantly less thrilling than chasing the current hot stocks. If you’re seeking that stock-picking rush, you might consider a happy middle ground: Dedicate a small portion of your portfolio to predicting the next big thing, and use index funds for the rest.
Neither the author nor editor held positions in the aforementioned investments at the time of publication.