If you had a time machine, where would you go? If you chose to start the year over again and make an investment in the year’s best performing company stock, you’d have made a hefty profit.
Even so, David Sekera, Morningstar’s chief U.S. market strategist, says most of us shouldn’t pick individual stocks. Instead, he says, the best bet for the broader majority of us is to stick to a diversified investment strategy with a mix of both stocks and bonds. “Individual stock selection requires a great deal of time, effort, and interest,” Sekera says. “For some investors it can help to bolster investor returns, but it should only be undertaken by those that have the additional risk tolerance, time, and aptitude to conduct the appropriate upfront analysis and ongoing ability to monitor their investments over time.”
But for those who did the required complex research, along with some good fortune, betting it all on the right individual stock would have increased your investment made at the time in multiples. With the use of Morningstar’s proprietary investment industry analysis tool known as Morningstar Direct, we pulled together the industry’s best-performing, publicly listed individual stocks of 2023 to see which one had the single largest gain over the period — and no it wasn’t Apple.
This stock has the biggest YTD gain — but it’s short-term gains can be deceiving
Yes, we know analyzing stock performance by looking at a window as short as 143 days is unlikely to provide a holistic view of the investment universe. However, while Apple (
““Most investors are usually best served by having a diversified portfolio across multiple asset classes and categories.””
If you had $1,000 available back on Jan. 1 to invest in the best-performing stock of the year, you would have experienced some wild growth over that short period. With that lump sum, you could’ve purchased around 1,111 publicly-listed shares of Warren, New Jersey-based biotherapeutics company Bellerophon Therapeutics Inc. (
That 741.11% return, however, can be deceiving — especially for long-term investors. First listed at $134.55 a share at the time of its initial public offering (IPO) on Feb. 15, 2015, BLPH — a company specializing in the treatment of cardiopulmonary diseases — has posted a total loss of more than 94.5% over the period. If you were to have invested $1,000 at the IPO date, your 7.43 shares today would be worth just $55.
Is it too late to invest — and should you even invest?
Because of that high level of risk involved in investing in any single stock for a long period of time, Sekera says investors “may be better off investing in products such as mutual funds and ETFs that can provide greater diversification.”
Just take the basket of stocks found in the SPDR® S&P 500 ETF Trust (
To be sure, nearly all companies that manage to outperform over the long term face periods of instability, data show. As many as 81% of all publicly listed companies that managed to beat broader stock indexes over the last 10 years still underperformed for at least five of those years, according to a report from Schroders. Nearly 41% underperformed for nine of those 10 years.
“Most investors are usually best served by having a diversified portfolio across multiple asset classes and categories,” Sekera says, adding that “this diversification will help to offset some of the idiosyncratic risk of investing in individual stocks and reduce the natural variability across market cycles. Investing in individual stocks can result in a much greater dispersion of outcomes.”