The markets are doing well in 2013, as the two most important indices set all-time records in March. But not every ticker was invited to the party.

Here's a look at five of the year's worst performers so far. I'll tell you what went wrong, and where I think these stocks are going next.

Is it time to bail out of these plunging stocks?
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Rare earth, common problems
Shares of rare-earth miner Molycorp (NYSE: MCP) fell 45% in the first quarter. The astronomic gains of 2009 and early 2010 are long forgotten, and shareholders have lost a stunning 93% of their investment in less than two years.

The company is losing money hand over fist and depends on loans and secondary stock offerings to keep its operations running. Plunging prices for Molycorp's materials, paired with an ill-timed $1.3 billion acquisition, seem to have doomed the stock.

Molycorp may return to hypergrowth one day, assuming that the global market for rare earth-powered electronics rebounds. But it has to happen before the company runs out of increasingly desperate cash-raising options. The potential returns could be astronomical, but the risk of going to zero also looms large.

These dynamics make Molycorp more of a lottery ticket than an investment. Proceed with caution, dear Fool.

Pigs can fly in Cincinnati
Regional telecom Cincinnati Bell (NYSE:CBB) took a 40.5% steel bath in the first three months, driven by poor earnings and a lack of telecom-like dividend checks.

Unlike many sector peers, Cincinnati Bell doesn't pay a regular dividend. The company has dropped hints that a dividend policy may be in the cards, but investors have yet to see a solid announcement. That's a huge drag on stocks in this income-friendly industry.

But the company has a few potential tricks up its sleeves. CinBell owns 69% of data-center operator CyrusOne (NASDAQ:CONE), which it spun out during the first quarter. The wireless division could be sold or spun out for a quick $300 million return. Finally, management is paying down much of its interest-bearing debt these days.

All things considered, fellow Fool Jim Royal sees a strong value in Cincinnati Bell. The risks are outweighed by the potential for a triple in Jim's eyes, assuming that you can wait two years for all the simmering catalysts to kick in.

This stock may not bounce much in 2013, but long-term investors should be richly rewarded for their patience.

The patent mirage is fading fast
Wireless-security researcher VirnetX (NYSE:VHC) is another big loser in early 2013, its shares having fallen 35% in three months.

More to the point, VirnetX plunged 38% in two days when a Texas jury found networking titan Cisco Systems (NASDAQ:CSCO) not guilty of infringing on the company's patents.

That loss was a major reversal of VirnetX's legal fortunes. The company has won or settled two major cases in the past two years, pocketing $200 million in the process and awaiting another check for at least $368 million. The Cisco case was supposed to cement VirnetX's position as an essential patent holder in all things related to network security, but the not-guilty verdict throws cold water over the entire strategy.

Investors are still sitting on a massive 1,600% gain over the past four years, despite the recent drop. The company doesn't collect any significant license royalties today, covering its daily costs from past courtroom victories. Take that income source away and you don't have much of a company. The Cisco decision could very well be a sign that this rickety strategy is about to fall apart.

I'd be very nervous owning this stock at valuations like 2,400 times sales and nonexistent earnings. If you rode VirnetX to massive gains in recent years, this would be a good time to take your profits and leave the blackjack table. I have a bearish CAPScall to back this conclusion up.

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.