The trend is your friend for best and worst stocks

Posted by: Aaron Pressman on July 12, 2006

Over at Laszlo Biryini’s shop, they’ve posted the 20 best and worst performing stocks in the Russell 2000 small-cap index for the first half of 2006. Nothing jumps off the page. Weight-loss firm Medifast (MED) almost quadrupled while biotech drugmaker Neurocrine Biosciences (NBIX) fell off a cliff, losing 83%.

It does make one wonder - is there a contrarian play here? Will the first half’s losers run up for the rest of the year while winners take a tumble? At least based on the 2005 data, the trend is your friend and the contrarians will be punished. The 20 top performers of the first half of 2005 gained a modest 9% on average in the second half, with 10 showing losses. The 20 worst performers went on to lose another 16% on average with just six gainers.

Reader Comments

santosh

July 12, 2006 5:40 PM

Too simple explanation to be true.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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