Saturday, December 13, 2014

Subsequent Performance of Biggest Gainer Stocks




A previous post looked at whether stocks that had a big single-day loss subsequently rebounded.   




This post examines whether big-gainer stocks fall or continue to rise?

Question:  How have the 20 stocks that gained the most since November 3 2014 fared since that date?   Would a decision to invest in these stocks on November 3 been a profitable strategy.


Data:   Here is information on stock prices for the biggest gainers of November 3.  


Performance of Biggest Gainers on November 3

Stock Price on Nov 3 COB
Percent Gain in Stock Price on Nov 3
Stock Price on Dec 12 near COB
Gain by holding 10 Dec 12
$100.57
25.87
102.06
1.5%
10.12
22.37
8.24
-18.6%
7.95
8.9
7.37
-7.3%
4.02
8.65
4.49
11.7%
2.78
8.17
3.82
37.4%
26.43
7.26
26.7
1.0%
9.84
6.96
9.64
-2.0%
3.43
6.85
3.29
-4.1%
13.12
6.58
NA
#VALUE!
55.9
6.56
38.8
-30.6%
5.83
6.39
5.25
-9.9%
8.98
6.27
12.01
33.7%
14.96
6.25
8.08
-46.0%
15.32
6.02
15.96
4.2%
2.26
5.61
2.41
6.6%
3.96
5.6
2.51
-36.6%
22.26
5.6
23.66
6.3%
13.04
5.59
11.23
-13.9%
18.47
5.54
19.82
7.3%
19.79
5.49
25.28
27.7%



Source of this data is Wall Street Journal Online.




The data from the WSJ online for Commercializadora del Norte did not appear to match historic Google Finance Data so this firm was dropped from the study.   Had this stock been included returns would have been worse than what I am about to report.


Here are the stats summarizing the subsequent stock performance of the remaining 19 firms. 

Statistics on Biggest Gainers
mean
1.0%
Median
-1.7%
std
0.219241577
Q25
-0.138803681
Q75
0.0730915
Min
-46.0%
Max
37.4%


While better than the biggest losers these returns don’t look very good especially given the volatility




Catching a shooting star
Initial Invesment on 11/03/14
Value at COB 12/12/14
Gain or loss
$1,000
$1,015
$15
$1,000
$814
-$186
$1,000
$927
-$73
$1,000
$1,117
$117
$1,000
$1,374
$374
$1,000
$1,010
$10
$1,000
$980
-$20
$1,000
$959
-$41
$1,000
$694
-$306
$1,000
$901
-$99
$1,000
$1,337
$337
$1,000
$540
-$460
$1,000
$1,042
$42
$1,000
$1,066
$66
$1,000
$634
-$366
$1,000
$1,063
$63
$1,000
$861
-$139
$1,000
$1,073
$73
$1,000
$1,277
$277
-$315



The buy the winner strategy on COB 11/03/14 would have resulted in a lot of risk and a small loss by 12/12/14.




My advice is to not use the Wall Street Journal big-loser or big-gainer list to select stocks.

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