A Buy the Loser Rally
lf you didn't own the dregs of the S&P 500 going into the rally that started last Wednesday, chances are you have underperformed over the last few days. We broke the S&P 500 into deciles (50 stocks in each decile) based on stock performance from the 5/19 high to the 7/15 low and calculated the average performance of stocks in each decile since the 7/15 low. The average stock in the S&P 500 has risen 6.44% since then. The 50 stocks that were down the most from 5/19-7/15 are up 26.4%. Conversely, the 50 stocks that held up the best during the recent market decliens are only up an average of 0.99%. Clearly, this has been a buy the losers rally.
Below we highlight the 20 worst performing stocks from the 5/19 top to the 7/15 low. As shown, they are up a whopping 37% since 7/15. Unfortunately, not many people still owned shares in them last week.
"Unfortunately, not many people still owned shares in them last week."
I'm confused. Are you caliming that fewer people own the stocks now as compared to before? Is this because ownership is more concentrated, or because you didn't think through what your statement meant?
Posted by: David Manheim | July 22, 2008 at 11:23 AM