The Worst Stocks for 2010

In hindsight, there couldn't have been a worse time to pick losing stocks.

This time last year, we were deep in the grip of the Great Recession, and the S&P 500 had fallen a spectacular 32% over the previous four months. Yet we had the nerve (or at least the editorial deadline) to call out 10 companies as the worst places to invest for the coming year.

And man, did they soar.

Big gains for lousy stocks
Of the 10 stocks we picked, only two -- Citigroup (NYSE: C  ) and Blockbuster (NYSE: BBI  ) -- actually lost money in 2009. Meanwhile, two of the picks -- Ford (NYSE: F  ) and Sirius XM Radio (Nasdaq: SIRI  ) -- more than quintupled in price. Several other picks, including Bank of America (NYSE: BAC  ) , Sears Holdings (Nasdaq: SHLD  ) , and Starbucks (Nasdaq: SBUX  ) , more than doubled. Overall, a portfolio equally divided among those 10 stocks would have risen an astounding 146% in 2009. Not exactly what we expected to see -- especially after making much better picks for 2007 and 2008.

Of course, at the time, things looked terrible for the markets. But today, we're in just as crazy a position as we were last year. The market is up more than 70% from last year's lows, but unemployment still sits near 10%. Retail holiday sales were nothing to cheer about, despite many economists saying the recession is over. And earnings season has not gotten off to a whiz-bang start.

Moreover, despite some amazing returns over the past year, many of last year's worst-stock picks are still in some pretty bad circumstances. Ford has $13 billion in Voluntary Employee Benefit Association obligations that it has to pay over the next decade or longer, plus billions more in long-term debt -- it will take more than an award or two to take care of that. Bank of America still has a bunch of garbage on its balance sheet. As for Sirius ... well, it's still competing against free radio, and with the stock still trading at less than a buck, I just can't treat it as a serious (you'll pardon the pun) place for my money.

The good, the bad, and the ugly
Amidst all this confusion, you still need to know which stocks deserve your money and which you should avoid. Well, we already covered that first part by calling out what we think will be the best stocks for 2010 (and you decided that the winner was a bit fruity). Now, we're here to give you our opinion on that second part. And, again, we're counting on you to choose which "wins."

So take a look at the list below, check out the arguments put forth by our writers and analysts, and vote in each article's poll on whether you think each of these will be the worst stock of 2010. Remember, we're a motley bunch of writers with motley opinions. But your votes will ultimately decide on the biggest loser. Check back here in a few days, after we tally up the results, to see what everyone considers to be the winner -- er, loser -- for this year.

Fool editor Jim Mueller owns shares of Apple and Starbucks, but no other company mentioned. Sears Holdings is a Motley Fool Inside Value pick. Apple, Ford Motor, and Starbucks are Stock Advisor selections. We are all about investors writing for investors.


Read/Post Comments (30) | Recommend This Article (54)

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 January 21, 2010, at 12:58 PM, Koeikan wrote:

    "As for Sirius ... well, it's still competing against free radio, and with the stock still trading at less than a buck, I just can't treat it as a serious (you'll pardon the pun) place for my money."

    It's competing against something free and it's trading at under a dollar? Thats why this is one of the worst stocks for 2010? Really?

    Gee, I'm convinced. Thanks for the "analysis" and for wasting my time.

  • Report this Comment On January 21, 2010, at 12:58 PM, gettingit wrote:

    Jim, why can't you invest in SIRI?

  • Report this Comment On January 21, 2010, at 1:05 PM, southernbeachguy wrote:

    Considering how bad you did last year, maybe this article should not have even been written. How does anyone pick The Worse Stocks? By doing this you are manipulating (in the short term) what happens to these stocks. Why not start writting real things going on with these companies, not guessing.

  • Report this Comment On January 21, 2010, at 2:04 PM, pondee619 wrote:

    "But your votes will ultimately decide on the biggest loser"

    How do you figure that? If my vote decided the biggest loser of the upcoming year, investing would be easy. Looking at last year, the opposite is more likely to be true. Voting does not influence a stock's performance.

    Perhaps it's time to stop this mental masterbation and start putting up some real educational articles on these pages. The cr4p available so far is severly lacking.

    Maybe we could strive for quality in lieu of quanity. "or at least the editorial deadline" is absolutely no reason for publishing advice that someone may take in their investment decisions. We could start by no longer repeating an artilce verbatium save for a new chart. We could explain more the why something should/might happen.

    Your readers know that you sell investment services, we don't need to be reminded each and every time we read something. Perhaps, if these pages had something more worthwhile on them, sales might increase. You know, when the appitizer is turds in a blanket, we aint gonna spring for the entree.

    A record of 2-7-1 is disturbing. Woe to the poor SOB who sold his holdings on your say so. Worse yet, the poor b4st4rd who shorted your Worst Stocks for 2009. I sure hope that no one out there is reading your "articles" seriously and taking your advice. Your mea culpa aside, someone may actually be taking you seriously and making decision based, in part, on what you say.

    SHAME ON YOU FOOL.. And yet, with last years dismal record fresh in your minds, you go out and do it again. Readers, look at last years results. Read with caution. Writers on the fool may not know any more than you. Their "articles" are written to meet "the editorial deadline" and sell you a news letter. Read at your own RISK.

  • Report this Comment On January 21, 2010, at 4:13 PM, cnight80 wrote:

    More Siri bashing by the fools, just as it climbs 0.10 this week and announces massive profits!!!! Keep being negative FOR NO GOOD REASON Motley Fool, and the sharholders of siri will keep watching their $$$ grow. How about some facts of why SIRI is such a bad stock in the MF's opinion? Joke of reporting, never ever any facts on siri. LONG ON SIRI!!!!

  • Report this Comment On January 21, 2010, at 4:51 PM, Pyrrhic wrote:

    Why no mention in the last three days about the BRK-B split, whether good or bad? Buffet is in just about every article on this site...

  • Report this Comment On January 21, 2010, at 4:54 PM, TMFHousel wrote:
  • Report this Comment On January 21, 2010, at 5:50 PM, OPTIONNUT wrote:

    This is truly a Fools Game...The listed stocks will all perform well or poor depending on our economic recovery and the backing of the Chinese boom vs a retraction in which case certain/most stocks will tank. If the current stimulus kicks in and we get a second stimulus with better leadership from congress...I expect a 10% pop in 2010.

    When I say a Fools Game...look at GS today with great earnings and it gets hammered over future gov. intervention of their favorite Son! Hmm, I bet not...GS is a winner!

  • Report this Comment On January 21, 2010, at 6:42 PM, britpick wrote:

    erm... so your best stock for 2010 is Apple? Yet it is also a candidate for worst stock - talk about hedging your bets! I guess you've learned from last years experience which is why you close with the statement "to see what everyone considers to be the winner -- er, loser -- for this year"

    PS I choose SIRI - I got it free for 3 months on my new Honda Pilot - absolutely no way I would pay a cent for it. Give me ESPN and NPR and my local FM stations free anyday, needless to say I did not sign up at the expiry of the trial

  • Report this Comment On January 21, 2010, at 6:54 PM, TMFHousel wrote:

    Pondee,

    You've made it quite clear that you have no respect for anything we do and feel the Motley Fool provides no value. That's cool -- your opinion.

    But can I ask, then, why you keep coming back day after day after day after day after day after day to tell us so? I don't think there's been a single day over the past year that you haven't spent at least a few hours (seriously) writing about how terrible we all are.

    There are countless Fools that appreciate what we do. You're clearly not one of them. That's fine. But for someone who complains that our articles are repetitive and thoughtless, you're becoming hypocritical.

    -Morgan

  • Report this Comment On January 21, 2010, at 8:34 PM, Koeikan wrote:

    Morgan,

    I don't like the Fools take on Sirius here, especially in an article like this that doesn't even comment on the fact that they just had announced had 200+ million in free cash flow for the last year. At least tell us *WHY* it's not a good stock. If I didn't have a vested interest, I'd probably find the glaring oversights humorous. With such reckless commentary, honestly it's hard not to become suspicious.

    You're running pretty low on credibility by this point... Care to respond? ...or do you only respond to the posts that are easy to shoot down?

  • Report this Comment On January 21, 2010, at 8:47 PM, TMFGebinr wrote:

    Hi Koeikan,

    You didn't read the article carefully enough.

    Sirius isn't on the list for 2010. It was one of the ones thought to be the worst for 2009. However, since being called out, it climbed over 400%. If you were a shareholder during that time, congrats!

    Hi cnight80,

    Sirius did not announce "massive profits" this week. They won't report results for Q4 and all of 2009 until some time next month. Instead, what they said was that they expect to report over $100 million in free cash flow for 2009, which is not the same thing as net income. They provide their definition of FCF (it's not part of GAAP) in the press release, but not knowing whether or not that has remained consistent over time, I don't know if the report of $100 million for 2009 is a good thing or not. Here's their press release from Tuesday detailing these facts: http://finance.yahoo.com/news/SIRIUS-XM-Adds-257000-Net-prne...

    Hi gettingit,

    I choose not to invest in Sirius, not "cannot." Two of the reasons I choose that way are given in the article, but I'll rephrase them here. No sustainable competitive advantage and shares under $1, a price range I normally avoid.

    Thanks for reading, everyone, and don't forget to vote for which one you think is worst for 2010!

    Cheers,

    Jim

  • Report this Comment On January 21, 2010, at 11:27 PM, ozzfan1317 wrote:

    They just dont understand Sirius is the greatest company ever the negative cash flow and massive debt and lack of a moat are no reason to avoid it....:)

    There now the sirius cheerleaders can come after me too..lol..P.S I lost 6K in that company if it does survive I wish its investors the best of luck but I dont like its chances.

    P.S. Fool dont mind Pondee he doesnt have too many hobbies..:)

  • Report this Comment On January 21, 2010, at 11:31 PM, ozzfan1317 wrote:

    They just dont understand Sirius is the greatest company ever the negative cash flow and massive debt and lack of a moat are no reason to avoid it....:)

    There now the sirius cheerleaders can come after me too..lol..P.S I lost 6K in that company if it does survive I wish its investors the best of luck but I dont like its chances.

    P.S. Fool dont mind Pondee he doesnt have too many hobbies..:)

    Correction They actually managed back to back cash flow positive quarters.

  • Report this Comment On January 22, 2010, at 8:19 AM, pondee619 wrote:

    Morgan:

    I'm not telling YOU about my complaints about your stories, I am telling your other readers, lest they actually take you seriously.

    Second, it does not take "hours" to see the inconsistencies in your stories. A couple of minutes during slow times during the day.

    Yes, your supporters are legion ("countless"). This story has 25 (TWENTY FIVE) people who actually recommended it.

    Why do I keep coming back? A vain hope that you will at some time soon live up to your promise. A truly worthwhile goal, sadly unmet.

    Please, shut me up. Explain to me, and your other readers, how a stock can be a pick in one of your investemnt news letters and be nominated as the WORST stock for the up comming year? It is either the worst stock to be in for the next twelve months or it is a stock to be bought. How is it that I, who consistently point this out, am the hypocrite.

    I notice that you have not challenged any of my assertations. Instead, you call me a hypocrite. Is your support of fool writing so weak you must resort to name calling as your only answer?

  • Report this Comment On January 22, 2010, at 8:19 AM, pondee619 wrote:

  • Report this Comment On January 22, 2010, at 9:00 AM, mkat33 wrote:

    Sirius/XM stinks. I will never be able to take that poor excuse for a company seriously unless it brings back Beyond Jazz. Until that time, I have to believe the company's best days are behind it.

    (To be honest, my investment in SIRI stock did just fine, thank you. But I really want to be able to listen to jazz fusion again.)

  • Report this Comment On January 22, 2010, at 9:37 AM, shinybagel wrote:

    Thank you Pondee. You have said what I have felt. This is one FOOL reader who appreciates what you have to say.

  • Report this Comment On January 22, 2010, at 10:52 AM, TMFHousel wrote:

    "Explain to me, and your other readers, how a stock can be a pick in one of your investemnt news letters and be nominated as the WORST stock for the up comming year?"

    The writer who picked it as a "worst stock" doesn't have to agree with the analysts who recommend it as a newsletter subscription. These are different people, mind you. It isn't the same person simultaneously picking and down-thumbing the same company.

    Hope that helps. We're allowed to, and encouraged to, disagree with each other.

    -Morgan

  • Report this Comment On January 22, 2010, at 11:29 AM, KlimbingKrazy wrote:

    I have to agree with pondee that I am disappointed in the direction this site has taken. It looked like a good source of info for the investment side of my portfolio, but I spend more time wading through articles that go on for pages and then want you to subscribe to yet anouther part of MF.

    But not to worry, I rarely have time to post, much less continue to belabour my point.

    I do get some entertainment out this and other sites in regards to how emotional people get about their stocks. I hate Apple products, but I've traded a lot of their stocks. Oil, Potash, what do I care about the product? Especialy potash... I don't use it, but I know far more about than I ever dreamed I would since I trade it a lot. But other than that I certainly could never say I loved it or hated it. It's a stock! I love my Blackberry and wouldn't touch an iPhone, but I would trade AAPL before I'd trade RIMM right now. I was very different a number of months ago. My like or dislike of a product has nothing to do with my buying or selling a stock. That would truely be Foolish!

    Oh well, I'm babbling, this is the most I've posted in months and all in one post.

    MF try to get back to honest information and promoting good trading or investing.

    The rest of you good luck and may your trades be profitable.

  • Report this Comment On January 22, 2010, at 11:40 AM, pondee619 wrote:

    "The writer who picked it as a "worst stock" doesn't have to agree with the analysts who recommend it as a newsletter subscription"

    Yes. BUT, Being the WORST stock of the year and being a pick in a "premium advice" newsletter is not a difference of opinion. The two are worlds apart. This will be the Worst stock for 2010 but, since you paid for our advice, you should buy it.

    "MF try to get back to honest information and promoting good trading or investing." Herer Here!

  • Report this Comment On January 22, 2010, at 1:08 PM, Rakir wrote:

    Pondee, while I agree with your overall message, I think you're harping on the wrong point. The article admits that they were completely wrong last year but are going to take a stab at it, basically. The nature of the economy and the markets (and mass psychology involved) is such that a stock -could- do great or -could- do horribly based on market psychology... so it's somewhat understandable.

    That being said... I agree with everything KlimbingKrazy says and most of what you say. TMF true "hidden gems" seem to be the 1 in 10 articles which actually contain relevant information - financial analysis, trends, etc. This article is more an overview of the "worst stocks.." theme, and all the people commenting on specific stocks - mainly Apple (sucks) and Sirius (go SIRI) - you're really missing the point of the article.

    Analyst's don't have to agree. It's anyone's game. If you want to know if somebody is worth following, look at their track record - but you can't really look to TMF as a whole because there's too many individual writers. That's my take, anyways, what do I know

  • Report this Comment On January 22, 2010, at 3:07 PM, DiscoFinance wrote:

    If you like Sirius XM, then see their “rags to riches” story on DVD. The movie is called “Stock Shock” and it goes over the history, development, and near-death experience of the stock. I did not know the inventor of sirius xm was a woman!–well she is now, at least. DVD is cheaper at www.stockshockmovie.com , but the DVD is pretty much everywhere for sale or rent.

  • Report this Comment On January 22, 2010, at 3:20 PM, langco1 wrote:

    a few of the big losers in 2010.....goog,gs,appl,htz,mco,rad,siri,mgm,ual,etfcaol,hog,car,dtg and of course aig!!

  • Report this Comment On January 22, 2010, at 4:03 PM, TMFBrich wrote:

    Pondee,

    A response to your "assertations."

    << Voting does not influence a stock's performance.>>

    Yes. This is true. This series is asking our community to vote on whether they agree with our writers' opinions that a given stock will be the worst performer of 2010. Of course, the results of the contest have no bearing on the actual stock performance -- just what the crowd thinks will happen.

    << We could start by no longer repeating an artilce verbatium save for a new chart.>>

    Not all readers of Fool.com content come to the website every day, or even every week. Because a small portion of the available readership sees an average Fool.com article, we sometimes republish what we deem evergreen articles to expand the reach of the article.

    << Your readers know that you sell investment services, we don't need to be reminded each and every time we read something.>>

    I disagree that we plug our investment services in each and every article. (For example, where's the plug in the above article?)

    The reality is, our Fool.com articles are free to anyone. We know a couple of things about delivering free content. First, online advertising does not come close to covering the cost of articles. Second, the experience of getting inundated by pop-up ads seems suboptimal (and it is also unlikely to cover our editorial costs), as is the idea of charging for access to what is currently free Fool.com content. Instead, we publish 50 to 60 free articles per day, with a minority of them containing plugs for our premium newsletter services.

    The small number of free articles that contain plugs are economical because of the two to three sentences at the end -- a plug for services that offer a free month with no obligation to subscribe.

    This is our approach to writing as many free articles as possible -- which takes investment talent, research, financial editing, and copyediting. Each article passes through several editors, who try to make sure that the content does not contain financial or grammatical errors.

    << A record of 2-7-1 is disturbing.>>

    Yes, it was a poor group of picks -- which we readily acknowledge in the above article. Here's the story of past series:

    2007 Worst Stock series: -2.2%; SPY: +0.8% (variance: +3%)

    2008 Worst Stock series: -43.5%; SPY: -38.7% (variance: +4.8%)

    And our Best Stock series:

    2008 Best Stock series: -34.6%; SPY: -38.3% (variance: +3.7%)

    2009 Best Stock series: 50.7%; SPY: 23.4% (variance: +27.3%)

    << And yet, with last years dismal record fresh in your minds, you go out and do it again. Readers, look at last years results. Read with caution. ... Read at your own RISK.>>

    This is a yearly series we do, so that's why we went out and did it again. And I would not disagree with your cautionary words: No one should buy or sell blindly because they read a single article.

    <<Explain to me, and your other readers, how a stock can be a pick in one of your investemnt news letters and be nominated as the WORST stock for the up comming year?>>

    A difference of opinion. We have no top-down editorial mandates; every Fool is free to write what she believes. As our name suggests, we are a motley bunch, even though we tend to ascribe to a similar investing outlook (long-term, company-focused investing). So, while most Fools fit under that big philosophical umbrella, each person is entitled to her own opinion on an individual stock.

    If a writer of a Fool.com article argues the bear case for a stock recommended in one of our premium newsletter services, we do not censor such disagreement. Indeed, we encourage it, as readers of our Dueling Fools feature know. Reading and considering different viewpoints, even if they disagree with a newsletter's official view, or your own, helps us all to become better, more informed investors.

    Also, it's partly a matter of time horizon: One of our writers believes Apple is overvalued for 2010; David Gardner has said he'd be happy to hold Apple for several years, if not a decade or more.

    Best,

    Brian Richards

  • Report this Comment On January 22, 2010, at 4:32 PM, pondee619 wrote:

    Brian:

    As I asked in another comment; what is your definition of Worst stock and Best stock?

    Mine is :

    Worst stock will underperform all others in its universe; Best stock will out perform all others in its universe.

    I submit that two reasonable people cannot look at the same stock at the same time and have one decide that it can out perform all others (best) and the other person decide that it will under perform all others (worst). This takes "difference of opinion" to an obscene level.

    Perhaps a problem is here: "we publish 50 to 60 free articles per day". Quanity over Quality? Same reasoning with having your letters rec two stocks each month?

    Whatever. Have a good day.

  • Report this Comment On January 22, 2010, at 4:54 PM, lemoneater wrote:

    I agree with truthisntstupid. I enjoy reading the for and against articles for a given stock. I want to get the whole picture. If any stock is above criticism or analysis, it has no place in my portifolio.

  • Report this Comment On January 23, 2010, at 10:33 AM, ryansanders wrote:

    This isn't really too relevant to the article, but: any plan to amend the comments section so users can rate the usefulness of comments?

    Something similar to YouTube (or any number of other sites to be fair), thumbs up/thumbs down and those comments with more than a certain percentage of thumbs down default to hidden, with an option to show?

    There's so few comments that actually add anything, that they kind of get lost at the moment.

  • Report this Comment On January 23, 2010, at 10:34 AM, ryansanders wrote:

    This isn't really too relevant to the article, but: any plan to amend the comments section so users can rate the usefulness of comments?

    Something similar to YouTube (or any number of other sites to be fair), thumbs up/thumbs down and those comments with more than a certain percentage of thumbs down default to hidden, with an option to show?

    There's so few comments that actually add anything, that they kind of get lost at the moment.

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