The Worst-Performing Stocks – Negative Returns Since JFK Was President (Returns Analysis – Video)

Would you like to know what the worst-performing group of stocks is?

One certain type of stock has not made any money since JFK was president. That is 60 years.

Yes, you read it right. 60 years! Any long-term mindset won’t help you if you invest in this type of stocks.

Which type of stocks has the highest risk?

Nassim Taleb once said that the good is mostly in the absence of the bad, so let’s reveal the type of stocks you would not like to invest in:

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	Lowest volatility	Second lowest	Median volatility	Second highest	Highest volatility
Lowest market cap	16.73%	17.54%	15.58%	10.48%	-2.76%
Second lowest	15.20%	16.1%	15.64%	12.99%	3.43%
Median market cap	13.43%	13.71%	14.84%	13.18%	5.76%
Second highest	12.69%	13.0%	12.96%	12.02%	6.9%
Highest market cap	9.72%	10.87%	10.15%	8.95%	7.81%

The table shows that the stocks with the lowest market value and the highest price variation/volatility have produced negative annual returns since JF Kennedy was president!

Thus, the riskiest stocks are volatile small-caps.

Omitting this group of stocks can help to improve returns – a lot.

What else do we learn from the table?

Clearly, it is best to search among boring stocks with low volatility and low market value.

Why do the worst-performing stocks perform so poorly?

Small-caps with high volatility have an uncertain business model. When this is the case, it is often difficult to determine the correct valuation. New information and news, therefore, substantially impact the share price.

Within the high volatility group, we also find newly established companies that may present a new idea or perhaps a break with existing businesses. It is challenging to pick the very few stocks that become multibaggers. Therefore, perhaps the best option is to invest defensively in “boring” stocks.

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Disclaimer

Quantified Strategies (SIA Lofjord) is not an investment advisor. The content and information provided are educational and should not be treated as financial advisory services or investment advice. Trading and investment in securities involve substantial risk of loss and is not recommended for anyone that is not a trained trader or investor – it shall be conducted at your own risk. It is recommended that you never risk more than you are willing to lose. Leverage can lead to substantial losses. Any use of leverage, margin, or shorting is at your discretion. Quantified Strategies (SIA Lofjord) is not responsible for any losses that occur as a result of its content and information.

Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, Since the trades have not been executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representations are made that any account will or is likely to achieve profit or losses similar to those shown.

FAQ:

Why are volatile small-caps considered the riskiest stocks?

The stocks with the lowest market value and the highest volatility, particularly small-caps with uncertain business models. Volatile small-cap stocks often have uncertain business models, making it challenging to determine their correct valuation. The impact of new information and news on these stocks is substantial, contributing to their high risk.

How can avoiding high-volatility small-caps improve returns?

The table suggests that searching among “boring” stocks with low volatility and low market value tends to yield better results. Omitting high-volatility small-cap stocks can significantly improve returns. Investing defensively in “boring” stocks with low volatility and low market value is considered a more prudent approach.

Why do newly established companies within the high-volatility group perform poorly?

Newly established companies within the high-volatility group may have uncertain business models and face challenges in achieving a correct valuation. Picking the few stocks that become successful in this group is challenging, leading to poor overall performance.