5 Stocks You Shouldn’t Touch in a Wobbly Market

Advertisement

Although most investors innately understand what’s going on now is just a little bearish volatility, that still doesn’t mean they — or you — want to be on the wrong side of a short-term selloff.

warning triangleSimultaneously, most investors also know some stocks are more vulnerable than others when the masses are experiencing a temporary freakout moment.

But which stocks are most subject to steep plunges should the market’s condition continue to deteriorate? There’s no set rule about which tickers are the first to fall the farthest when the whole shebang is unraveling. However, these five stocks are likely to get hit the hardest should the broad market starts to take on water again this time around.

Just keep in mind that not every stock on this list is a bad stock. While some face problems with earnings results and corporate performance, some just have an issue with perception, and ultimately could be long-term buying opportunities on any pullbacks. Timing is everything.

So, in no particular order …

LinkedIn (LNKD)

lnkd linkedin stockWhile LinkedIn (LNKD) should have nothing left to prove when it comes to long-term staying power, traders still tend not to trust the social/professional networking name when the market sours. That might be because if a short-term setback for the market ends up being an omen of a long-term economic lull, the job posting feature at LinkedIn — the company’s bread and butter — will become relatively useless.

The assumption isn’t necessarily an accurate one about LNKD, mind you. But it doesn’t matter. These are dots that some investors are going to connect in their heads simply because the logic is simple and easy to embrace.

Seagate Technology (STX)

Seagate STXThe good news is, when the market is in rally mode, Seagate Technology (STX) is almost always leading that charge. The bad news is, whenever the market is falling, STX stock is leading that charge too. Volatility is a two-edged sword.

Not that there aren’t higher-beta stocks out there than STX stock, but there aren’t too many. Seagate Technology boasts a beta score of a whopping 2.48, which means whatever the S&P 500 is doing at any given time, STX is doing it 2.48 times faster or more intensely (and Seagate has more than verified this relationship in recent years).

That’s fine as long as the broad market’s in bullish mode. That’s just too much risk when the market is on shaky ground, though.

Disney (DIS)

DIS stock disney stock euro disney ceo bob igerIf there’s any stock out there that’s owned predominantly because the investor is also a consumer of the company’s product, Disney (DIS) likely tops that list. At one point — when paper stock certificates of DIS stock were still issued — it was the most purchased stock solely for gift-giving and display purposes. It was deemed to be art as much as it was an investment.

Point being, a lot of people tend to own Disney for all the wrong reasons.

Being a little on the naive and undisciplined side (whether for art purposes or not), many of these owners may be quick to dump it at the first sign of trouble, even if that trouble is nothing more than a short-lived stumble.

Intel (INTC)

Intel (INTC)Similar to LinkedIn, investors generally presume that times are good for Intel (INTC) when the economy is humming and the broad market is rising. Conversely, if stocks are tanking, it’s easy to assume Intel — one of the lynchpins of most technology we all use everyday — is leading the charge lower.

The data completely says otherwise, of course. A simple look at recent results reveals that Intel posted declining revenue and earnings in fiscal 2012 and then again in fiscal 2013 despite a strong market and a strong economy.

If INTC can’t do well when times are good, traders are quick to conclude there’s no way the stock’s worth owning if doubts anywhere are starting to rise.

Amazon.com (AMZN)

amazon stock amzn stockThis is only a recent phenomenon, as Amazon.com (AMZN) at one time not so long ago was a perpetual market darling, attracting buyers even when stocks as a whole were wobbly. The sentiment tide has turned against Amazon, however, and a company that could do no wrong then can now do very little right.

Fair or not, if AMZN stock can’t perform well in a bullish environment (as has been the the case in 2014 — it’s down 22% while the Nasdaq is still up a bit for the year), it sure as heck isn’t going to be seen as a must-have name in an environment that’s not bullish.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/5-stocks-wobbly-market-lnkd-intc-stx/.

©2024 InvestorPlace Media, LLC