I had Josh Brown help me answer this one on this week’s Portfolio Rescue: I would imagine some combination of innovation, obsolescence and disruption play the largest role in creating big losers in today’s market. It was typically outside forces that caused problems: JP Morgan’s research found most of the time it wasn’t poor corporate management like Lehman Brothers. Everyone loves a story about a stock that made someone gobs of money.Īs to how to spot those companies that are on the precipice of a downfall, that’s very difficult to answer. No one likes to brag about a stock that lost them tons of money. Just 10% of all stocks since 1980 can be defined as mega-winners.īasically you have a much higher probability of picking a mega-loser than a mega-winner in your portfolio.īut because of survivorship bias, we hear far more stories about the winners than the losers.More than 40% of all stocks experienced negative returns on an absolute basis.stock market) and two-thirds of the time that stock would have underperformed the index itself. Pick any stock from the Russell 3000 (which is basically the entire U.S.Some more stats from this report that are borderline mind-blowing if you’re a stock-picker: They find more than 40% of stocks in the Russell 3000 since 1980 have experienced a catastrophic loss, meaning the stock fell 70% from peak levels and never reached those levels again. JP Morgan has a report called The Agony & The Ecstasy that’s easily one of my favorite pieces of long-term research on the difficulty of picking the winners in the stock market. There are way more stocks that have fallen out of the S&P over time. And these companies are still in the index. There are 18 names that are down 70% or worse. I count 56 stocks in the S&P 500 that are currently down 50% or worse from their all-time highs. GE’s share price woes may seem like an outlier but it’s actually the norm. It’s now the 86th largest name in the index. This is a notable fall from grace for a stock that was consistently in the top 10 biggest names in the S&P 500 for decades:įrom 1980 to 2015 General Electric was a top 10 holding in the S&P 500. It’s now under one hundred dollars, meaning the share price has fallen 80% from the peak. The price was as high as $480 a share at the turn of the century: ![]() General Electric is a wonderful example here. ![]() What are some signs that an investor can look for that a stock has probably gotten as high as it’s ever going to get? Is there any way of telling when a stock has probably hit its peak, if not for good, for a long, long time? For example, GE hit its all-time peak back in the year 2000, and since then, it’s been on a long decline. 30, 2022.Picking the Losers is Easier Than Picking the Winners in the Stock Market ![]() 3, 2022, and the stock closing prices on Dec. The rankings are based on the opening share prices on Jan. Then we list the 10 companies whose stock prices declined the most, concluding with the IT vendor with the biggest loss. We start with the seven winners, counting down to the IT vendor with the biggest stock price gain during the year. ![]() Here’s a look at the biggest stock price winners and losers in 2022. Most companies on the CRN watch list recorded hefty double-digit percent declines in their stock prices during the year with 17 losing more than half of their value. The trend in tech stock prices was otherwise down for the year amidst an uncertain economy, inflation, rising interest rates and the COVID-19 pandemic that just wouldn’t go away. And several of those were due to acquisition deals that pushed up stock prices. It’s no surprise, then, that among the 60 publicly traded IT vendor companies on CRN’s watch list, only seven recorded an increase in their share price in 2022. The tech-heavy NASDAQ ended 2022 down more than 33 percent. The year was especially tough for tech stocks, which generally had one of their worst years ever. stocks since 2008 in the midst of “The Great Recession” with the S&P 500 down nearly 20 percent for the year and the Dow down close to 9 percent. Turbulent 2022 Was A Tough Year For Tech Stocks
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