This has been one of the harder years in recent memory to lose money buying American stocks. But the unlucky holders of several dozen clunkers managed this trick pretty nicely.
While the broad stock market has gained more than 25% for 2013 and nearly every sector has delivered positive returns, pockets of profound weakness now feature some 50 large- and mid-capitalization stocks down more than 10% year-to-date. The small-cap Russell 2000, with a wider sample of volatile and untested companies, had at least 50 stocks shed more than 40%.
Behavioral-finance experts tell us holding on to losing stocks while wishing for a comeback is among the most deeply ingrained mental traps humans and their money fall into. Year-end tax-planning sessions are where hope often goes to die, as investors are motivated to sell underwater stocks to reap losses that can offset capital gains they have booked.
This tends to lead to further pressure on already-weak stocks in December, followed by a pronounced,Read More »from Time to Shop for Beaten-Down Stocks Primed to Bounce