And the World's Scariest Stock Is ...

And the scariest stock in the world is ... not Crocs (Nasdaq: CROX  ) .

Crocs was rated only the third-scariest stock in our Scariest Stock in the World contest. The scariest wasn't Select Comfort (Nasdaq: SCSS  ) , either -- it picked up the silver.

No, our readers determined that DryShips (Nasdaq: DRYS  ) was the scariest in the world.

Keeping our heads
Before the defenders of those companies place my head on a pike, I'd like to emphasize that scary doesn't necessarily mean bad. Many of the companies in our contest -- Google (Nasdaq: GOOG  ) , Blue Nile (Nasdaq: NILE  ) , and (Nasdaq: AMZN  ) among them -- are outstanding businesses, but they may also be dangerously overvalued.

In Amazon's case, some investors might brush off its trailing price-to-earnings ratio of more than 100, or the 12% plunge in its share price just more than a week ago. Other folks might be understandably and justifiably, um, scared.

To further illustrate that point, our scariest stock, DryShips, actually declined by 18% yesterday alone. While dramatic losses like that are a part of investing, they're unsettling all the same.

The ship's come in
As Rich Smith noted in his discussion of DryShips for this contest, some of the best investors at the Fool appear to have called this one seriously wrong. Analysts like Bill Mann and TMFEldrehad have expressed reservations about the company's management, only to see its share price continue its stratospheric rise. Many others -- like Rich and myself -- have rated DryShips to "underperform" on Motley Fool CAPS, and have seen our overall CAPS scores suffer as a result. So far -- as many of the commentators on Rich's original article were quick to point out -- much of the Fool's coverage on DryShips has quite literally missed the boat.

So far. Often, inflated stocks and inflated markets catch investors by surprise. It's only after the plunge off the cliff that the valuation concerns become apparent. This happened during the tech boom with stocks like Sun Microsystems (Nasdaq: JAVA  ) , and it's happening right now on an epic scale, with companies overexposed to the current subprime crisis. It may well never happen with any of the stocks in our contest, but investors would be wise to be extra-cautious before buying companies with sky-high valuations.

Be careful out there
When you're out there trick-or-treating this year, on your street or Wall Street, exercise caution -- you never know what might be lurking in the shadows. It can be scary out there. Happy Halloween!

Let us know your thoughts about all of the stocks in our contest by visiting us at CAPS. Click here for a free membership to the community.

Read/Post Comments (0) | Recommend This Article (40)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 539464, ~/Articles/ArticleHandler.aspx, 10/26/2016 1:48:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,202.18 32.91 0.18%
S&P 500 2,139.46 -3.70 -0.17%
NASD 5,255.51 -27.89 -0.53%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 1:33 PM
CROX $7.72 Down -0.05 -0.58%
Crocs CAPS Rating: **
DRYS $0.37 Down -0.01 -3.41%
DryShips CAPS Rating: **
SCSS $19.15 Down -0.36 -1.85%
Select Comfort CAPS Rating: *****
AMZN $822.67 Down -12.51 -1.50% CAPS Rating: ****
GOOGL $820.30 Down -8.25 -1.00%
Alphabet (A shares… CAPS Rating: *****
JAVA.DL $9.49 Down +0.00 +0.00%
Sun Microsystems,… CAPS Rating: **
NILE $35.25 Up +0.05 +0.14%
Blue Nile CAPS Rating: **