Stat o' the Day: Inside the Junk Rally

Last month I talked about the character of this market – the fact that lower quality, cyclical stocks seemed to be leading after underperforming in 2011.  USAToday Money puts some meat on those bones with this astounding factoid: Stocks that are losing money are outperforming profitable ones in the S&P year-to-date!

Over the past four quarters, 26 companies in the Standard & Poor’s 500 have posted net losses. Sears Holdings (SHLD) posted the biggest loss of all, to the tune of $3.1 billion.

How have the shares of these money-losing stocks performed so far this year? Sears Holdings is up a remarkable 139%, a strong showing for a company that’s losing money. Perhaps this is the stock that prompted you to ask the question. On average, shares of the 26 companies that lost money are up about 12.4% this year. That tops the 9.7% average gain by the remaining stocks in the S&P 500 of companies that made money.

But wait. Before you run out and buy shares of companies that are losing money, keep a few things in mind:

• The average gain by the money-losing companies is greatly distorted by the gain by Sears’ shares. If you take the median of the money-losing companies, the median gain is 7.7%. That falls short of the 8.8% median gain by the companies in the S&P 500 that made money last year.

Damned Sears is teaching investors all the wrong lessons!  Knock it off!

Source:

Money-losing companies seeing stock gains, but should I buy? (USAToday)

Tags:

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. sex commented on Sep 18

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  2. bitcoin evolution reviews commented on Sep 19

    … [Trackback]

    […] Here you can find 11731 additional Info on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  3. bitcoin loophole review commented on Sep 27

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  4. www.rapidrupee.in commented on Nov 19

    … [Trackback]

    […] Read More on on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  5. kinky curly wigs commented on Nov 28

    … [Trackback]

    […] Find More here to that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  6. MU commented on Dec 14

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  7. expedia lodging commented on Dec 15

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  8. 토렌트사이트 추천 commented on Dec 19

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  9. CI/CD commented on Dec 20

    … [Trackback]

    […] Read More here to that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  10. 메이저놀이터 commented on Dec 24

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  11. https://www.affordwatches.com/ commented on Dec 30

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]

  12. replica watch commented on Dec 31

    … [Trackback]

    […] Here you can find 96945 more Info to that Topic: thereformedbroker.com/2012/03/05/stat-o-the-day-inside-the-junk-rally/ […]