It's been a rough year so far for the S&P 500 — the worst start to a year since 1970s, says LPL Financial. And bad stock picks are making matters much, much worse.
Had you bought the worst stock in the S&P 500 each month, including consumer discretionary Under Armour in May, you would have lost an impressive 92% of your money this year, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. In dollars and cents, that means a $10,000 starting investment in January would only be worth just $783 now.
And here's the roughest part. You'd need a 1,177% gain just to get your money back from those five months of losses. This massive decline isn't intended to scare. After all, savvy growth investors know to cut their losses on individual stocks for this very reason. And long-term mutual fund investors avoid the temptation to panic.
But still, losses of this magnitude underscore how brutal this S&P 500 really is, if you find yourself in the wrong spot.
It's Been A Strange Year For The S&P 500
If it feels like this market implosion is worse than usual, you're not alone. It's an historically bad run.
The S&P 500 continues to flirt with a bear market. It's down more than 14% this year already. And there's been no real relief, either. The S&P 500 dropped every single month this year except for a small rise in March, falling anywhere from 3.1% in February to 5.3% in May.
It's been the worst start to a year for most people recently active in the market since the 1970s. "In fact, it is the fourth worst start to a year ever after 100 days, with only 1932 (Great Depression), 1940 (World War II), and 1970 (Vietnam War and a recession) worse," said LPL Financial's Ryan Detrick.
Looking At The Ugliest Of The Ugly
Given the severity of this year's S&P 500 implosion, there's no question you could do much worse.
Most recently, that meant owning shares of athletic leisurewear maker Under Armour. Shares of the stock collapsed more than 35% in May alone. It's just one of four S&P 500 stocks, also including DexCom, Royal Caribbean Cruises and Target, to lose 30% or more during the month. And the trends aren't favorable for Under Armour either. Analysts think Under Armour's adjusted earnings per share will fall nearly 40% in calendar year 2022.
But that's just the latest implosion. The worst place to put your money in April, unfortunately for many, is a more popular stock: Netflix. Shares of the video streamer plunged 46.7% in April. That's an especially ugly showing in a month the S&P 500 dropped just 5.4%.
It's not the worse monthly drop, though, of an S&P 500 stock this year. That award goes to tech firm EPAM, which shed 56% of its value just in February. EPAM shares tried to recover in March and May (It dipped a bit in April), but they're still down a crushing 52% this year.
If you managed to sidestep these implosions, though, Detrick says history points to the pain letting up.
"The previous five worst starts to a year ever saw the remainder of the year higher every single time, up 19.1% on average compared with the average rest of the year gain of 5%," he said. "2022 has been very tough, but most investors would likely take a 19% bounce the rest of the year."
How To Lose 92% Of Your Money In Stocks In Five Months
Worst performing S&P 500 stock each month this year
| Month | Worst S&P 500 stock | Symbol | Stock monthly % change | Sector | S&P 500 % monthly ch. | Beg. bal. | Cumulative value of $10,000 investment in January reinvested in worst stock each month |
|---|---|---|---|---|---|---|---|
| January | Moderna | -33.3% | Health Care | -5.3% | $10,000 | $6,670 | |
| February | EPAM Systems | -56.4 | Information Technology | -3.1 | 6,670 | 2,908 | |
| March | PVH | -21.7 | Consumer Discretionary | 3.6 | 2,908 | 2,277 | |
| April | Netflix | -46.7 | Communication Services | -5.4 | 2,277 | 1,214 | |
| May | Under Armour | -35.5 | Consumer Discretionary | -5.3 | 1,214 | 783 |
