The World’s Scariest Stocks

It feels like a scene from a slasher film: Mr. Market grabs a blunt object and clobbers the stock prices of innocent bystanders. Banks with risky loans are suddenly left pleading for one more day. Hedge funds are liquidating their holdings by the dozens, just to stay afloat.

And now a gaggle of crazies -- Freddy, Jason, and Jigsaw -- are standing in the corner whispering, "Let’s play a game."  

On second thought, let's not
For many investors, it’s not a dozen or so stocks that scare them. It’s their whole portfolio, and the recent volatility of the market. Here at the Fool, we’ve been serving up daily market analysis and commentary to help you make rational decisions based on long-term thinking. However, we’d be lying if we said that every hammered stock presented an opportunity.

There are still stocks out there that will leech your portfolio.

And 2007’s Scariest Stock is …
Last year for our World’s Scariest Stocks contest, we looked at 11 companies that were rated poorly among our CAPS community. Needless to say, they’re all in the red significantly. And based on your votes, you singled out DryShips (Nasdaq: DRYS  ) as the world’s scariest stock for 2007. Its performance has been scary as charged, but it hasn’t been the worst performer so far:

Company

Price on 10/28/08

Price on 10/29/07

Return

Crocs

$1.79

$72.20

-97.5%

Select Comfort (Nasdaq: SCSS  )

$0.48

$11.11

-95.7%

XM Satellite Radio (Nasdaq: SIRI  ) *

$1.66

$15.17

-89.1%

DryShips

$14.05

$128.35

-89.1%

Overstock

$9.73

$38.00

-74.4%

Blue Nile

$24.99

$80.30

-68.9%

Goodyear Tire & Rubber

$8.60

$27.11

-68.3%

Research in Motion (Nasdaq: RIMM  )

$46.99

$122.06

-61.5%

Google (Nasdaq: GOOG  )

$368.75

$679.23

-45.7%

Dendreon (Nasdaq: DNDN  )

$4.45

$7.59

-41.4%

Amazon.com (Nasdaq: AMZN  )

$56.04

$90.10

-37.8%

*XM Satellite Radio merged with Sirius to form Sirius XM Radio on July 29, 2008. The price on 10/29/2007 was taken from Capital IQ. The price on 10/28/2008 was derived by multiplying Sirius XM Radio’s adjusted closing price by 4.6, which is the number of shares that XM shareholders received from the Sirius merger.
Source: Yahoo! Finance, using adjusted close prices for the given dates.

Wait, but most companies not on our list are red year over year as well. Before you go calling foul, I should point out that the S&P 500 posted a negative 39% in that same time frame. So, of the companies we highlighted last year, only one -- Amazon.com -- beat the market, but that was by a measly percentage point. Meanwhile, two -- Select Comfort and Crocs -- have lost over 95% of their stock price since.

Now that’s frightful
Onto this year’s list of scariest stocks. Our analysts have singled out eight companies that they believe should scare your booties right off. You’ll see some repeat offenders on our list from last year and some familiar faces -- but all of the companies below have been rated negatively by our community with one or two stars (out of five) in CAPS. If you agree with an analyst, rate that stock an "underperform" in CAPS. If you disagree -- hey that’s okay, too -- just rate the company an "outperform" in CAPS. Based on your votes, we will declare a winner. So help us choose the world’s scariest stock by telling us which stock keeps you up at night.

The World’s Scariest Stocks:

Happy Halloween from all of us at Fool HQ! Click this link and scroll down to see our spooky group costume photo. Your workplace not as fun? Apply today for a ghoulish Foolish position with us. 

Fool Katrina Chan does own shares of Starbucks but holds no positions on any of the other companies mentioned. Amazon.com and Starbucks are Stock Advisor recommendations. Google and Blue Nile are Rule Breakers picks. Starbucks and Sears are Inside Value selections. Crocs is a Motley Fool Hidden Gems Pay Dirt pick. The Motley Fool owns shares of Starbucks. The Fool’s disclosure policy dueled Colonel Mustard with a wrench in the conservatory.


Read/Post Comments (25) | Recommend This Article (44)

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.

  • Report this Comment On October 31, 2008, at 12:05 PM, DemianBohemian wrote:

    It's too bad you were recommending XM as a stand alone company to your paid subscribers at over $30 a share.

    SIRI/XM is a lot less scary at .34 a share......way under valued.

    That's 3 Motley Fool articles in a row so far just today that mention SIRI in the article.....

    They are trying to fish for hits to their worthless website....

    Taking advice from the Motley Fool is scary,,,

  • Report this Comment On October 31, 2008, at 12:39 PM, cruzn59 wrote:

    another rotten article from motley fool. what is your point. you keep giving us history. we can get that anywhere. give us something that validates your existence. clear direction.

  • Report this Comment On October 31, 2008, at 2:16 PM, J56D wrote:

    I couldn't have said it better than Demian so I will repeat what he said.....

    It's too bad you were recommending XM as a stand alone company to your paid subscribers at over $30 a share.

    SIRI/XM is a lot less scary at .34 a share......way under valued.

    That's 3 Motley Fool articles in a row so far just today that mention SIRI in the article.....

    They are trying to fish for hits to their worthless website....

    Taking advice from the Motley Fool is scary,,,

  • Report this Comment On October 31, 2008, at 7:02 PM, SandyPrice wrote:

    I have to agree, it is "too bad (they) were recommending XM as a stand alone company to your paid subscribers at over $30 a share." Why don't you guys set up CAPS profiles so we all can copy you, since you apparently (from that tone) don't pick any stinkers.

  • Report this Comment On November 01, 2008, at 12:27 AM, kyddfool wrote:

    come on guys.......TMF gives out the best advice around and tells YOU to do your own research as well not to mention watch and pay attention to what is happening - all the time. NOBODY looks after your portfolio as well as you do ( or should ). Would you rather listen to that showman on CNBC!!!! now THAT is scary.

  • Report this Comment On November 01, 2008, at 2:57 PM, MWasserman1 wrote:

    Ladies and Gentlemen,

    I have two TMF subscriptions and enjoy reading their travel stories, historical facts and analysis, BUT I signed on to get the best ADVICE. Good stock advice includes when to buy AND when to sell. It's easy to recommend what to buy (my racquetball opponent tells me, my father-in-law tells me, my handyman tells me, etc.) -- it's a talent (worth paying for) to know when to sell. I'm VERY disappointed in TMF experts (that unlike me, do stock and market analysis for a living) not recommending selling 90 days ago, 60 days ago, 30 days ago, etc.

    And last but not least, I can't believe in the section above entitled: "The Motley Fool's 2 Top Stocks" they say "23 of 24 (picks) are in positive teritory" and "seven have at least tripled" -- and they are basing this on July 30, 2008 prices! 90% of my portfolio was positve 90 days ago, too, but today isn't 90 days ago. Come on MF, you need to give sell recommendations and you need to admit the true current value of your picks.

  • Report this Comment On November 02, 2008, at 8:39 PM, Mailbug wrote:

    Now, i'm as lost as these Motley Fools. First u say save Sirius, now you're sinking it, what gives? State your stand and be firm. I'm not saying you have to sugarcoat and hide facts that are critical (sirius being in debt etc), but come on, when you start off something with "Let's save sirius" etc, you go all the way, show some freaking devotion and not just trying to play the gallery as and when you like.

    I'm a subscriber of MF, and no doubt that they're giving good advice etc, but like MWaserman said, FACE REALITY and BE BOLD in coming out with all the so called Tripled stocks gain that Motley's brothers chose and come clean... You could start by:

    Dear MF subscribers, we've screwed up big time, most of the 23 stocks we picked, have sunk on average 70% since our "recommendations".. i suggest u guys put stops at the following intervals" or something.

    And guess what, that's the FACT MF, Take it like a man, or fools, or whatever ...

  • Report this Comment On November 03, 2008, at 2:29 AM, unclefour wrote:

    Hi guys,

    I am from Hong Kong. I am new to here. Did you happened to notice FM had recently recommended any Hong Kong listed stocks?

    Many thanks.

    unclefour

  • Report this Comment On November 03, 2008, at 10:10 AM, eng2 wrote:

    You didn't mention here that Select Comfort was a Motley Fool Hidden Gem pick.

    And, the stock tanked some 70% long before the market crash.

    I paid $200 for that Hidden Gems newsletter, but that cost was minimal compared to what I lost on bad stock advice.

    I don't feel very Motley.

    I just feel like a fool.

  • Report this Comment On November 03, 2008, at 10:24 AM, davidjon13 wrote:

    "TMF gives out the best advice around"

    Does anyone else around here remember when TMF was pushing the Dogs of the Dow? Does anyone else around here remember when TMF was saying that the average investor should have his/her ENTIRE portfolio in stocks, and in most cases in an S&P 500 index fund?

    Has anyone else around here noticed how much of TMF is advertising for TMF, with some advertising for brokers half-disguised as helpful information - and yes, I have seen seen the tiny disclosure in the corner.?

    Has anyone here ever tried to talk to any human being at TMF on the telephone, about a subscription problem for example?

    I wonder what the ROI of the TMF recommendations would be if they tracked their entire portfolio forever, as honest people do.

  • Report this Comment On November 03, 2008, at 11:51 AM, chali2na wrote:

    Fool, I appreciate your articles as I don't have much time at all to research current financial info on multiple sites. I'm not a know it all about all companies and markets as some of your "readers" above apparently are, but I think you guys do a good job of keeping the other 99% of us casual investors abreast of developments, which then allow us to research what interests us further. I guess the angry people above expect every article to give them a can't lose hot stock tip for free....if not, a website then is considered "rotten" or "scary". These naive people need to realize that the Fool doesn't run these companies, nor does it approve mortgage loans, or choose when rates go up/down, etc. etc. Keep up the good work and keep us informed...that is all that can be expected.

    P.S. I am a Sirius stockholder and though I still think it is a can't lose business model, I believe the powers that be at that company need to start telling their investors something.....anything. And their lack of advertising kills them. Oh yea, but that's the Fool's fault right?

  • Report this Comment On November 03, 2008, at 12:27 PM, Slipswitch wrote:

    Although it may not be the worst of the bunch, MF Stock Advisor recommended JBLU, contrary to all conventional wisdom, such as Buffet, to never buy an airline. I think it is down about 75%+.

  • Report this Comment On November 04, 2008, at 5:15 PM, LakeJuJu wrote:

    I'm retired, and have lost a lot. A 66 year old woman trying to rebuild and learn. I've been a member for a very long time, and wish ya'll would just give direct answers. I went to 4 places trying to find out the '2 best stocks to buy now' and all ya'll wanted was to 'join up'! Still DO NOT know the 2 best stocks!

    Better yet, to subscribers send a totally different email to, as to what is happening and do not have to search. What is our monies for if not for 'Ya'll's Advise'?

  • Report this Comment On November 05, 2008, at 1:22 PM, BeboLindo wrote:

    I recommended this article because of the comments, with which I tend to agree. (Katrina, this is NOT directed at you, but in particular the Gardners and other TMF executives) Sorry for the long post, but some things have been bothering me for quite a while and I finally have a few minutes to assemble them.

    Fools, are you listening ?

    .

    Sure, it's nice to be able to put in a whole bunch of MY time into research, and TMF can reduce that time, but it is still a WHOLE BUNCH of time which I unfortunately do not usually have. So sell recommendations would be useful if they came earlier, as for instance with the aforementioned Select Comfort, which lost me a BUNCH of $$ based on continuing & repeated Buy recommendations from Hidden Gems for said loser company. So much for "one your top single best stock ideas" or however it was phrased not long before its meltdown. (I AM grateful for the IMHO better-reeeeaaallly-late-than-never final change of heart to SELL in the $2/share range, but that's just me. Does it strike you as more than a little late, too?? At least I did not ride it down to $.35!) I am a long time member and currently I have six MF subscriptions (HG,SA,RB,GG,PD,AR), and the buy-side is in my opinion waaay too favored, and has been for a long time. That results in WAY too many stocks potentially in my portfolio to follow effectively. I have kept my actual portfolio rather lean, but am I just paying for an "idea service" or for incisive directions? Many times somethng significant has happened at/to one of your cherished recommendations and I hear nothing but SILENCE from TMF for the longest time, or find nothing but a rather lame mention in the context of a free sales-pitch article for one of your services. Also, it sure would be nice to be able to streamline my research of a particular recommendation from months or years ago, and pull up a paid-subscription search across all my subscriptions (or is this possible and I just have not yet found the key? )

    Fool, are you listening? Please comment!

    .

    My idea of a much more useful paid service would deliver all the great ratios & calculations TMF recommends already calculated, and presented in table form much like the vaunted Value Line or (IMHO, less vaunted) S&P reports, each quarter. This would be presented for EACH and EVERY stock that is currently in the covered list for EACH AND EVERY newsletter. I would ask for commentary on any trends that are noteworthy, positive or negative. If the price be higher for such service, that would be well worth it. Commentary on developments (much like is done already) along with LINKS to news-worthy sources for more in-depth research would be helpful, too. You could be helping us DO our homework, not just recommending for US to do the grunt work. To me, paying for the grunt work to be done is the only way most of it actually gets done. And please note, I am NOT talking about the amazingly-detailed cash-flow projections Bill Mann & others produced in the early days (dog farts, anyone?), just incisive analysis of the financial statements. I will still take responisbility for considering the statements, aided by your commentary & advice, and for synthesizing my final evaluation.

    Fool, ARE YOU LISTENING ? ? ?

    .

    I wonder if the TMF philosophy has become "Recommend MANY stocks; surely SOME of them will be multi-baggers for bragging rights...just don't talk about the rest."?

    Fool, are you listening?

    .

    I may have to trim back on my subscriptions... I used to heartily recommend TMF to other budding investors, but I am having SERIOUS second thoughts. And NOT because of the Crash, which well could prove a magnificent opportunity for TMF to redeem itself... but somehow I have my doubts. The opinion I am currently synthesizing is that maybe being invested in individual stocks is only for those who can do theie homework and analysis full time?

    Fool, ARE you listening? Hello?

    Thanks for letting me get this off my chest.

    Most Sincerely,

    BeboLindo

    .

    p.s. and another thing, the Million Dollar Portfolio. This is touted based on targeting some handsomely high annual returns. Only problem is, none of the subscription services have overall returned ANYTHING CLOSE, even as of June 2008 (before the Crash). Just how does the Fool plan to deliver such nice results in the future, for several decades? Please clarify!

    Fool, are you listening?

  • Report this Comment On November 07, 2008, at 4:42 PM, rkonn wrote:

    I have STOPPED my subscriptions to TMF. It seems you have become much better at promoting yourselves than "picking a stock". I would set up a "shadow portfolio" of your picks and was never able to make the kind of money you showed when you would solicit others to buy your reccomendations. It seems like every time I log on, I am asked to purchase yet another service. Come on TMF, WE are the ones who have to make money for you to survive.

  • Report this Comment On November 07, 2008, at 6:28 PM, blablabla102 wrote:

    I am beginning to think all these stock advisers are just like the real estate guru's who for a small fee will give you the hot markets and creatve financing. I have learned from experience that if they knew all they say they would have no need of subscription fees cause they would already be fabulously rich and not need any of my money.

  • Report this Comment On November 08, 2008, at 8:16 AM, Orlbb wrote:

    Clearly, the TMF is experiencing the backlash of many who are suffering in this current malaise...I am begining to agree with the sentiment that you really are not any better than a chimp and a dartboard. Let's see...we can retroactively compare Cramer's picks to TMF- I will take a Certificate of Deposit.

  • Report this Comment On November 09, 2008, at 2:09 PM, deelelbee wrote:

    I was gifted a satelite radio and subscritption, used it two years. The concept is flawed. Here is the Pacific timezone the satelites, pass the small window between the trees such it seldom works for more than 20 minutes at a time. In my car it is useful on long trip when I'm away from my local stations but interrupted by trees and tall buildings. Then to top it off - THEY HIRED HOWARD STEARNS and wasted an enormous amount of capital on that jerk. 25 cents may be too much for the stock.

  • Report this Comment On November 10, 2008, at 4:08 AM, bobetro wrote:

    Hi Guys,

    Your dissatisfaction is justified, but I don't understand what is all this bitching for. If you don't like the MF just leave, as I did.

    Using the available info while on trial subscription, I checked some of their 2006/2007 record, then tracked some recommended stocks in mid and late 2007: conclusion was that I would fair better if I did exactly the opposite. And also the policy of dumping several new buy recommendations every week, no follow ups, no sell signals.

    Came just to check whether anything's changed - reading your comments, it hasn't. Too bad, but there are other "gurus": Leeb, Navellier, et al.

  • Report this Comment On November 10, 2008, at 5:48 AM, tremondi wrote:

    I too have dumped my subscriptions...it started with FTK tanking months ago with no new information. Since then, I have been reading material from all over that is free. I had hoped to learn more as a new investor using Motley Fool, but was only swayed into thinking they had all the information I needed. I have moved on and at least now I have no one to blame but myself for the decisions I make.

  • Report this Comment On November 11, 2008, at 7:28 PM, Bonnell65 wrote:

    All these folks are complaining about poor returns at this single point in time. I guarantee there is an investor out there who retired, moved his stocks into income producing securities back in February 2008 and is thanking TMF for his gains. Sadly, in November 2008 we've all taken a beating on our paper holdings. Yes, some companies have taken a SEVERE beating, and shame on TMF for not seeing it coming and giving us sell recommendations. But who did??? Looking at an overall portfolio (yeah, diversification is preached by TMF), our exposure should have been mitigated. Again, at this point in time, who among you would sell your holdings now??? No self-respecting CFA would recommend selling anything in this depressed market, and I'm betting it's going to get worse. The only sure thing these days is the cash flow from my job (thank God I still have one), living below my means (which TMF preaches to begin with), and the coming increase in taxes.

  • Report this Comment On November 12, 2008, at 10:04 AM, BeboLindo wrote:

    No, Bonnell65, emphatically not!

    Didn't you read the other comments? Or just not pay attention to what they are actually saying?

    These complaints are NOT about a single point in time. Over the past several years! Time and time again! The current market is just making the pain fairly intense and bringing out the commenter tendencies in normal lurkers. Go look it up if you doubt me!

    To be fair, stock picking is a TOUGH business. Some commenters are railing against that simple fact. Nobody is perfect. However, this is not to let TMF totally off the hook! There ARE some improvements that can and should be made.

    "Just leave TMF" is one option. I respect of their [fairly honest, IMO] efforts, I will stay for a while at least. There are other options, however. In the spirit of continuous learning and continuous improvement which I note TMF embraces, I offer: A few more timely "Sell" recommendations would be welcome even if they are premature or ill-advised. However, even better than that, more nuanced recommendations would help. For instance, "Risk appears to be up significantly. Sell unless you are in a position to speculate." would be a nuance that is clearer than "changes are occurring... to be fair management should be given a chance to prove they can do this...recommend we wait and see". That would help us mitigate the newly-popularized psychology concept of "endowment" [buzz-word? Yes, but important! FYI, The Economist had a good writeup June 22, '08 pp95-96] which makes us reluctant to give up something we already own - a powerful portfolio deflator if ever there was one!

    Can you see the difference? If not, perhaps you are not listening. Or maybe not thinking.

    And oh, by the way, I agree with your observation on increasing taxes.

    BeboLindo

  • Report this Comment On November 12, 2008, at 10:12 AM, BeboLindo wrote:

    Bonnell65,

    I just had another thought. Perhaps you have no paid TMF subscriptions?

    BeboLindo

  • Report this Comment On November 13, 2008, at 5:43 PM, davidjon13 wrote:

    "But who did???"

    Many, many people, including me. One of my tracking programs is showing a 36% drop in the S&P 500 over the last year, while my portfolio is down 11%. My relative returns fro the past 3, 5, and 10 years are even better. An 11% drop is no fun, but it's better than 36%.

    Is it because I'm so smart? I'd love to think so, but unfortunately, no. Instead of using TMF as a major source, whose business model is based on selling more and more stock-picking services, whether or not it's to the user's advantage to buy them, I use information available for free all over the Web, written by people who IMHO have proved their honesty and abilities both in theory and practice, and information from basic books available for free in many public libraries, or for a very few dollars over the 'Net.

    I use only free articles appearing on TMF, and even then only to get brand new ideas to seed my own research, or to get further opinions and data where my ideas are already developed. I don't think that their stock picks are worth paying for, and given their cavalier attitude to their potential customers, I don't expect them to be in the future.

    Only one man's opinion; I hope that it offends noone.

    D.

  • Report this Comment On November 17, 2008, at 1:44 PM, terryheapy wrote:

    I joined here to learn about building a portfolio and learning about stocks and what I got was a tease to pay more to get what i thought i was getting in the first place - wont be rejoining because tmf is more about buying then producing - tm

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