One year ago, the market looked
downright bleak.
Fannie Mae (NYSE: FNM) and
Freddie Mac
went into conservatorship, Lehman Brothers was wrapped up
in the arms of bankruptcy protection, and
AIG (NYSE: AIG)
was savedfrom the same fate only by government
intervention.
But it wasn't just individual companies. The fundamental
picture of the economy was deteriorating rapidly. Housing
prices fell like Wile E. Coyote stepping off a cliff, banks
started admitting that their balance sheets stunk like
landfills, and consumers succumbed to the mountains of debt
they had stacked up when credit was fast and easy.
You know the story … For investors, it
was like being air dropped into a
minefield. Because of this chaos, many stocks were
unfairly punished. But which was the
mostunfairly punished? Let's find out.
Beware of exploding stocks
It's not hard to find stocks that were choked into
submission by the falling market. Between Sept. 15, 2008,
(the date of Lehman's bankruptcy) and the March 9, 2009,
bottom, the S&P 500 index lost 43% of its value. But
there were plenty of individual stocks that took a much
bloodier beating. Here are just a few:
Company
Market Cap
on Sept. 15, 2008
Price Change
Las Vegas Sands
$12.6 billion
(96%)
Ambac Financial
$1.8 billion
(94%)
AIG
$12.8 billion
(93%)
Citigroup (NYSE: C)
$82.9 billion
(93%)
ING Group
$57.6 billion
(87%)
Bank of America (NYSE: BAC)
$121.1 billion
(86%)
U.S. Steel
$11.4 billion
(82%)
Source: Capital IQ, a division of
Standard and Poor's.
Price change calculated between 9/15/08 and
3/9/09.
But in many of these cases, the companies were on the
brink of extinction. Punished? Certainly. Unfairly punished?
Probably not.
Babies, bathwater, and incredible returns
Panic is
a fickle beastand it often leads investors to do silly
things like sell stocks that really should be bought. Savvy
investors didn't even need to wait for the March bottom.
Those who were buying at the beginning of this year -- smack
in the middle of the selling frenzy -- may well be sitting on
doubles or better today. Here are just a few examples of
hundreds that I found:
Company
Price Change
Genworth Financial
340% Continued... |