Nightmare On Wall Street: 3 Bearish Stocks To Avoid – Wynn, Las Vegas Sands, Peloton

Summary

We’ll look at how to spot stocks at risk of performing poorly – The Walking Dead – and being turned broke.

We’ll discuss tips for creating a portfolio to identify high-risk stocks using the Seeking Alpha Grading System.

The bearish stocks featured here, Wynn, Las Vegas Sands Corp., and Peloton may help you understand why it’s vital to consider our Quant Rating System, which has a track record of significantly outperforming the S&P 500.

Zonf/iStock via Getty Images This fall brought an incredible drought for the S&P 500: 42 days without gains of more than 1% through mid-September, something it had not seen since January 2020. Volatile price swings are happening, and buying the dip can offer upside potential. The question is, for how long, and which stocks can genuinely bear it?

The second question has a clearer answer, from my perspective: Stocks with very bearish ratings, based on our Seeking Alpha “Quantamental” analysis, are at the largest risk of going south. Below we see one such example we’ll discuss at greater length later, Peloton ( PTON ) – a stock which Cathie Wood, for one, has been offloading lately : My advice? Heed these warnings. While some consider bearish stocks an opportunity to buy at a lower price, it’s crucial to assess a company’s fundamentals. And above we see a snapshot of Peloton’s, incorporating both trading algorithms and vital collective attributes of value, growth, profitability, EPS Revisions, and stock price momentum. Here at Seeking Alpha, we emphasize why it’s important to create and evaluate your portfolio before jumping into bearish ideas. A look at the chart below will show you how accurate SA has been over the years at identifying weak stocks as poor performers compared to the performance of the S&P 500 as a benchmark. Stocks that underperform the S&P 500 are dead money. Stocks underperforming also carry the risk of losing money. Let’s take a closer look at those risks – and some specific stocks to avoid, in my opinion. What is a Bearish Stock?

Bearish stocks are stocks expected to underperform their sector and are also at risk of underperforming the overall market, which is why we prefer avoiding them due to negative compounding. These stocks should be approached with caution; the goal of investing is, of course, to grow, and equally important is measuring risk, as well as avoiding losers. Based on a quantitative model I’ve spent years testing, re-testing, and refining, results indicate that the probability of loss is higher with the stocks that receive a bearish rating, which is important when your goal is long-term wealth accumulation.

For most of us, the goal with long-term wealth accumulation is to try and limit the downside. For every loss incurred, a more significant gain is required to get back to even. For instance, if Wynn Resorts ( WYNN ), which we’ll discuss in this article, is trading at $100 and contracts 20%, it’s now worth $80. Even if it rebounds 20%, you’re only at $96, which is $4 less than the $100 you purchased the stock at. So, you need a 25% gain to rebound back to $100 and break even.

That’s a practical example as to why my quant rating system emphasizes a focus on good grades and minimizing the downside to achieving a long-term goal of growing a portfolio. If you already have a portfolio with a financial institution, brokerage or are simply keeping a list in a spreadsheet, try creating a Seeking Alpha portfolio . With our portfolio tool, you will stay informed about the market news and identify stocks that are the best fit for your investment needs. Notably, this tool really will help you to identify the deadbeats and walking dead in your portfolio. It is well worth the few minutes to use this tool because it can save you from catastrophic losses. How to Create a Stock Portfolio

Seeking Alpha’s Create a Portfolio is an easy-to-use tool that can identify which companies you like best – in this case, we are focusing on bearish stocks. Not only will our screeners allow you to find stocks using our proprietary quant model, but we hope that having eliminated riskier options, you will find hidden gems with the potential to be your next great stock play while creating the custom portfolio from scratch that meets your needs.

> Click My Portfolio at the top of the Seeking Alpha page. Next, click the Create Portfolio button. If you already have a Seeking Alpha account, […]

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