The scariness of the markets hasn't disappeared with the passing of Halloween. After a breather and a small rally leading up to the election of President-elect Obama, markets resumed their gloomy ways with a two-day drop of 10%. Last week’s report of a 14-year high in the unemployment rate is unlikely to help, either.

On Halloween, we asked you, our Foolish readers, to go to CAPS and vote for the World's Scariest Stock by ranking them as "underperform." We had some pretty scary contenders, too.

The also-rans
Citigroup (NYSE:C), for instance. This was called a bank without a niche, in an era when anything related to the financial sector was the stock equivalent of Freddy Krueger. Did you vote it the World's Scariest? Nope. In fact, more of you called off your underperform ratings than made new ones.

You did vote for Sears Holdings, which clinched third place in our scariest stock contest. The buybacks at Sears don’t seem to be working for shareholders, much less helping any sort of turnaround. Then there was Yahoo! (NASDAQ:YHOO), a company struggling to stay relevant in Internet search and advertising in the face of Google's (NASDAQ:GOOG) dominance. A nearly uninterrupted string of falling year-over-year income figures since the first quarter of 2006, and a stock price that had fallen nearly 60% over the previous year, helped win your votes to rank this the second-scariest stock. Given last week's news that Microsoft's (NASDAQ:MSFT) CEO has no interest in making a new buyout offer, Yahoo! should be trying to maintain its own second-place status in the competitive web arena.

The envelope, please
This year's winner of the title of World's Scariest Stock is a retailer. It sells a relatively expensive product, and despite a loyal customer base, it's been closing stores recently. This company's also facing stiff competition from the likes of McDonald's (NYSE:MCD) and Tim Hortons (NYSE:THI) for its main product. It's even cut back on the number of products offered, in an attempt to get back to basics. And last quarter, Foolish readers, it reported its first quarterly loss as a public company.

As CAPS member amicidelbosco eloquently put it in making an underperform call last weekend:

This whale can only see further depths. Even Captain Ahab will find difficulty navigating this one. It's woes have been festering before our present global financial crisis. Meaning that weakness is more acute than the Mermaid can see.

Ladies and gentlemen, I present to you the winner (or loser, depending on how you look at it) of the Fool's 2008 World's Scariest Stock Award: Starbucks (NASDAQ:SBUX)!

Starbucks is a recommendation of both Stock Advisor and Inside Value, and The Fool owns some shares. Google was chosen by Rule Breakers, Tim Horton's by Global Gains, and Microsoft by Inside Value. Try any one of those newsletter services free for 30 days.

Fool editor Jim Mueller owns shares of Starbucks and is a beneficial owner of Microsoft, but he had no position in any other company mentioned at the time of publication. The Fool is investors writing for investors.