Why continue to take single stock risk?

The Financial Sector ETF (XLF) provides access to leading financial stocks in the S&P 500, all within a single security.

Learn more about the Select Sector SPDR Fund XLF.

Last year, the Nasdaq 100 returned over 50%, one of the greatest single-year performances of all time. It was really hard to not make money last year. I don’t think you could have lost money investing in tech and communications stocks even if you were actually trying to.

And yet, not every stock worked. As always, there were a few handfuls of basket case losers whose own idiosyncratic fundamental problems precluded them from being a part of the rally.

I had Sean Russo make us a list of the worst Nasdaq 100 stocks. We ranked them by the degree of their drawdown from their own all-time highs. Most of them had set these highs back in 2021, but not all. I had him pull out all the consumer staples stuff like Dr. Pepper Keurig and get rid of the oil names too (did you know that Baker Hughes trades on the Nasdaq?). We were left with tech, biotech and communications, basically. We kept PayPal in because it’s basically a tech company that happens to be categorized as a financial - this isn’t science, bear with me.

Specifically, I wanted to see the eight most hated stocks in the Nasdaq 100 and here’s the list we ended up with:

The Hateful Eight Nasdaq 100 stocks at present are: Sirius, PayPal, Moderna, Illumina, Warner Bros Discovery, DoorDash, Charter Communications, Atlassian.

Michael and I each selected a portfolio of four of the Hateful Eight names which we will track competitively throughout the course of this year. Each of our “portfolios” is weighted equally, so each stock is 25%, no rebalancing and no trades. It wasn’t a draft so we could each own the same stocks.

You can watch us select them at the 31:30 minute mark here:

These are our portfolios, may god have mercy:

Michael:

PYPL
MRNA
DASH
TEAM

Josh:

WBD
SIRI
PYPL
ILMN

Who do you think will win?

As always, the benefit to this sort of exercise has nothing to do with winning or losing. It’s forcing ourselves to think critically about some pretty tough investment situations. The challenges these stocks face are fairly well understood at this point. But what, if anything, might change? What possibility is being overlooked?

Research @ Ritholtz

That other guy you see in the YouTube thumbnail is Sean, whom we invited on to discuss the Hateful Eight list in his first appearance on The Compound network. He was great! Sean has been doing research with us for a couple of years now and he moved from Colorado to New York City this winter. If I sound smart on television or you love the charts and data we include in our podcasts, you can thank Sean for always having us so wonderfully prepared. When he’s not assisting us with writing and broadcasting, he’s working on behalf of our clients and advisors, tackling research projects and portfolio questions morning, noon and night.

When we put the word out that we were looking for a research associate on the Animal Spirits pod, we knew we’d get a ton of applications. We didn’t count on getting this lucky. You’ll be seeing more of Sean as time goes by.

I hope you’re having an awesome week, talk soon! - JB