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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.