It's March Madness time, the most exciting three weeks in sports. For the uninitiated, I'm referring to the NCAA men's college basketball tournament, which will determine its winner with Final Four games on Saturday and the championship on Monday night in Houston.
My alma mater, San Diego State University, has survived to make it to their first Final Four in the men's tournament (and I'll be there to root the Aztecs on!). The other men's Final Four teams are Florida Atlantic University, the University of Miami, and the University of Connecticut (aka UConn), and they will meet this weekend to see who is the 2023 national champion.
But a funny thing about this foursome -- none of the teams was a top seed entering the tournament. History shows at least one No. 1 seed had made it to the regional finals every single time. This year was the first time this did not happen.
This tells us college basketball is now all about parity, and if you get hot you can go on a nice streak. Even the best teams can have an off day, and their opponents will make them pay for it with a swift exit.
Such is the stock market at times. We know the market has its own "No. 1 seeds." You are familiar with the names -- Apple (AAPL) , Microsoft (MSFT) , Tesla (TSLA) and Amazon (AMZN) . We read about these companies every day and they tend to draw the most interest and dollars to their stocks.
If we had put a stock market bracket together for March Madness, these four stocks arguably would be the No. 1 seeds as they are among the highest-valued companies in the world. But how might they fare versus the upstarts?
Well, let's take a look.
Apple is the biggest by far by market capitalization, but it is not the best performer in its group. Oh, the stock is up a robust 21% since the start of 2023, well ahead of the Nasdaq 100 (up 16%). But did you know Nvidia (NVDA) is up an amazing 53% in the first quarter?
How about Microsoft, which has been choppy all year long. This stock is up a respectable 15% this year, and is one of the leaders over the past several years. But you could have produced a better return over the last 15 months by buying and holding First Solar (FSLR) , which is up 46% in 2023 after a tremendous run higher last year.
Tesla is a name everyone hates to love and loves to hate. Nobody can ever get enough of Elon Musk and his words of wisdom. But is Tesla worthy of a No. 1 seed? Maybe, but it wasn't in 2022.
So far this year the electric vehicle maker has risen a solid 53%, but that follows a very poor showing in 2022 when the stock dropped a staggering 65%. Over the last 15 months Tesla is down 46% from where the stock ended 2021. Alternatively, you could have bought Occidental Petroleum (OXY) like Warren Buffett did. That stock is up a stunning 117% over that same 15-month period.
Finally, we have Amazon, which like Microsoft is being dragged higher by the strength in the Nasdaq 100. Amazon is up 15% in 2023, exactly like the Nasdaq. But you could have bought shares of Baidu (BIDU) , which is up a robust 40% in 2023. That return in 2023 crushes Amazon.
The point is, the top seeds in this year's men's basketball tournament started as heavy favorites to move on to the Final Four, yet formidable opponents such as San Diego State and Miami beat two of the top seeds during their journey to potential greatness. If you had these upstarts going far in your bracket, you're in good shape. If you were relying on the No. 1 seeds to make it far, you're probably not going to win your bracket challenge.
The stock market is no different. The strong names often can lead you to good profits over time. However, if you do your homework you can find hidden gems at any given time that will make your portfolio shine even brighter than the No. 1 seeds.