Editor's note: The market is on a tear this year... But beneath the surface, some of the largest stocks are struggling. Today, we'll hear the details from Vic Lederman of our corporate affiliate Chaikin Analytics. In this piece – adapted from a September issue of the free Chaikin PowerFeed e-letter – he explains how to avoid these wealth destroyers to protect your portfolio...
Beware the Wealth Destroyers Hiding in the S&P 500 By Vic Lederman, editorial director, Chaikin Analytics
Folks, maybe it hasn't felt like it at times... but we're still in a bull market. The stock market is absolutely soaring this year. The S&P 500 Index is making new highs. And it's up more than 20% since the start of the year. But that doesn't mean you should own every stock out there. Heck, even the S&P 500 is hiding wealth destroyers. Now, maybe that sounds extreme. But it's true. First, let's look at a company that has lost more than 64% of its market value in 2024. It's a stock that you obviously would have wanted to avoid this year. Then, we'll look at a less obvious example – a stock that's dragging down returns in a soaring bull market. Put simply, these are the kind of wealth destroyers we should avoid right now...
| Recommended Links: |  'GET OUT OF CASH IMMEDIATELY' Salting away your cash in a T-bill is one of the worst things you could be doing with your money today. A powerful new way of handling your cash (NOT with gold or cryptos) could double or triple your money during a historic "disconnect" coming to the U.S. markets. By October 29, click here for the full details. | |
|---|
|
We can identify these dangerous stocks using the Power Gauge system... That's a tool we use at Chaikin Analytics to gather an array of investment fundamentals into a simple rating of "bullish," "neutral," or "bearish." Let's get into it... I know this might sound obvious... but you should avoid buying "bearish" stocks – even in a bull market. Sure, the S&P 500 is broadly soaring. But there are still serious pitfalls hidden in the index. Take a look at this screenshot from the Power Gauge... Based on the SPDR S&P 500 Fund (SPY), the Power Gauge sees 140 "bullish" or better opportunities in the broad market. But at the same time, 75 stocks earn a "bearish" or worse rating. Think about that for a moment... We're talking about the 500 largest stocks listed in the U.S. market. And the Power Gauge is urging you to avoid about 15% of them. This is serious business. When it comes to wealth destroyers in SPY, just look at pharmacy chain Walgreens Boots Alliance (WBA)...  Walgreens is a household name. But that hasn't stopped its share price from collapsing... The stock is down a staggering 65% this year. And as you can see, it has been in "bearish" territory for most of 2024. Walgreens clearly isn't benefiting from the bull market. But maybe that one is too obvious. After all, Walgreens' struggles this year are national news at this point. So let's take a look at a different dangerous stock... Video-game company Take-Two Interactive Software (TTWO) is a perfect example. It's another underperformer hiding in plain sight in the S&P 500...  As you can see, the stock hasn't had a "bullish" rating since last November. And this year, while it hasn't performed nearly as badly as Walgreens, it's struggling. Take-Two Interactive has stayed roughly flat in 2024. Remember, we're in a bull market... The stock should be soaring. With a $28 billion market cap, Take-Two Interactive is a giant in video games. It also owns big game developers and publishers. Despite that, in one of the S&P 500's best years on record, the stock has been dead money for investors. Now, I can already hear it... "Vic, I see that – but just look at how well the broad market is doing." And it's true that the S&P 500 is soaring. But that doesn't mean you're obligated to hold the wealth destroyers hiding in it. It pays to be an active investor. Do your homework and be selective. With tools like the Power Gauge, you can find these losers – and remove them from your portfolio, before they destroy your wealth. Good investing, Vic Lederman
Editor's note: Chaikin Analytics founder Marc Chaikin has nailed almost every major market move of the past four years – including a warning about the "Magnificent Seven" just before a nearly $3 trillion loss. Now, on Tuesday, October 29, he's stepping forward to help you prepare for a massive "disconnect" he sees in the markets. This powerful approach could potentially double your portfolio... by helping you spot the biggest buying sprees on Wall Street before they occur. Get all the details right here. Further Reading "If you want to analyze the health of the market, it's not enough to simply look at the S&P 500," Brett Eversole writes. Right now, a specific signal shows the bull market is still going strong. And we can expect today's broad rally to continue... Learn more here. After the Federal Reserve's recent rate cut, many folks are uncertain about the future of inflation and interest rates. But those are the wrong worries to focus on. History shows stocks are likely to rally even more through year-end... Read more here. |
| 
