The Credit Strategist Blog
The following chart shows some of the most severely damaged stocks in the current market. Bear in mind that the Fed barely started raising rates or shrinking its balance sheet. The stocks listed below should never have traded as high as they did (and if you think they are going to recover, think again), and many stocks still trade at unjustifiably high valuations and will join this list. With the Fed about to start 50 bp hikes and QT, we are still in the early innings of the pain trade; only the Nasdaq is in bear market territory (down 20%) while the Dow and S&P are on one side or another of a correction (down 10%). More names will join the death list and investor losses will grow steeper as the excesses of the biggest bear market in history are wrung out of the system. This is a healthy process; what was unhealthy was the bubble that preceded it. Credit markets are just as bad with corporate credit still offering unattractive yields (negative real yields for the most part), no covenants and no liquidity (private markets are better but you have to watch credit quality). This is among the least attractive market environments in years. Buy gold and save yourself.