Comeback Stocks

The average stock in the S&P 500 was down 10.04% on Monday. Since Monday's close, the average stock has risen 7.6%.

We broke the index into deciles (10 deciles of 50 stocks) based on stock performance on Monday and calculated the average percentage change of the stocks in each decile since then. As shown below, the stocks that performed the worst on Monday have averaged the biggest gains since then, while the stocks that held up the best on Monday have gained the least.

click to enlarge

Below we highlight the 25 best performing stocks in the S&P 500 since Monday's close. CIT has seen the biggest gains at nearly 50%, followed by XL (42.9%), PLD (36%), and MBI (34%). Other notables on the list of winners include Wachovia (WB), CBS, KB Home (KBH), Bed Bath & Beyond (BBBY), Merrill Lynch (MER), and Morgan Stanley (MS).

Comments

[joeactuary:]

So essentially you sorted stocks by their Beta. No surprise that the large Beta stocks (decile 10) declined the most when the overall market declined and improved the most when the overall market went up.

2008 Dec 04 10:45 PM

[CT Programmer:]

Nothing like some good old performance chasing. Did it take both of them to do the chart?

2008 Dec 05 08:11 AM

[gdog:]

I don't think that's quite correct. If you actually look at some reported beta values for the stocks above, the range is stark. Wachovia, a banking stock, is negative, CBS and KBH is moderate at 1.3, 1.17 respectively and CIT, is nearly 2.

So CIT makes sense, and KBH is heavily tied to home markets, and CBS is under a lot of pressure recently. The point being that Wachovia, CBS, and KBH are clear examples where historical betas are not a good guide in current conditions. There is significant disagreement in the valuations of all three companies, and CBS in particular was recently grossly undervalued.

This is also probably one way the SEC monitors for insider trading.


On Dec 04 10:45 PM joeactuary wrote:

> So essentially you sorted stocks by their Beta. No surprise that
> the large Beta stocks (decile 10) declined the most when the overall
> market declined and improved the most when the overall market went
> up.

2008 Dec 06 04:55 AM