While Nvidia soaked up headlines in 2024 as the company continued a multi-year rise, the chipmaker didn’t finish the year on top of stocks in the S&P 500. Instead, the title for highest stock market return in 2024 belongs to Palantir, the Peter Thiel-founded software firm that specializes in data analytics, which returned 340.5% on the year.
Nvidia’s 171.2% lands it in third. Utilities firm Vistra (261.3%), United Airlines (135.3%) and weapons manufacturer Axon Enterprise (130.1%) round out the top five.
Whether you own one of these high-flying stocks or are just considering adding one to your portfolio, this time of year tends to raise a philosophical question: Looking ahead, would I rather own last year’s winners or last year’s losers?
On one hand, hot stocks in hot industries could continue to outpace the market. On the other, many investors — Warren Buffett chief among them — have gotten rich buying stocks when they’re trading at a discount.
If you look at past market data, the answer is nuanced, but clear, says Sam Stovall, chief market strategist at CFRA.
“History tells us you want to own last year’s winners if last year was an up year,” he says. “If last year was a down year, you want to own last year’s losers.”
Why 2025 may be a good year for last year’s winners
As a reminder, 2024 was an up year for stocks, and a big one. Stocks in the S&P 500 returned nearly 25%, piggybacking on a 26% performance in 2023.
That makes 2025 an environment where, generally, the market’s top performers have tended to do well. Going back to 1991, when S&P sector data became available, a portfolio that owned the top-three performing stock market sectors from an up year in equal parts beat the S&P 500 75% of the time, by an average of 3 percentage points, according to CFRA data.
But that doesn’t mean you should let all your winners ride or rush to your brokerage to buy the stocks on the list above.
For one thing, when it comes to individual stocks, prices can fluctuate for idiosyncratic reasons. Stocks can move on fundamental factors — such as corporate earnings or balance sheet strength — which may have nothing to do with other names in the sector. Investors may even glom on to company-specific news, like the rollout of a new product or brand or the hiring of a visionary executive.
For another, it’s essential to make decisions about your portfolio based on your specific investment goals, experts say. If you have a big winner in your portfolio, examine your reasons for owning it in the first place, says Stovall.
“Why did I buy this stock? Was it for the dividend yield? Was it for the price appreciation potential? Was it for diversification?” he says. “And then you ask yourself, did it meet my goals already, or is there still upside potential?”
If you examine your thesis behind owning a particular investment and it’s still intact, you may feel comfortable holding. If you believe a stock has reached the limit of its upside, it may be worth trimming your position or selling.
Set up rules for adding to or selling winning positions
Deciding to hold or sell is a tricky and often emotional call to make — which makes it all the more important to have a few hard-and-fast guidelines for what’s in your portfolio, says Doug Boneparth, a certified financial planner and president of Bone Fide Wealth.
One revolves around concentration risk. If any stock represents too large a portion of your portfolio, the thinking goes, too much of your financial future is tied up in one company. Boneparth recommends setting a limit for your portfolio, even if it means selling some shares of a stock that’s done spectacularly well.
“Greater than 20% is really where I draw that line. I don’t want concentration going beyond that,” he says. “The more concentration you have, the more risk and more volatility you would have based on the performance of that that one stock.”
And if you’ve realized extremely robust gains, even if you think an investment could climb further, it rarely hurts to take some profits for yourself, Boneparth adds.
“If you have an opportunity to change your life or achieve an important long-term financial goal, strongly consider doing that,” he says. “That likely will be better than waiting to see if that rally or run continues.”
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