These 10 Crummy Stocks Already Cost Investors $300 Billion

The S&P 500 is being pulled down by the five stocks that are missing out on the year's gains.

These 10 Crummy Stocks Already Cost Investors $300 Billion

What could be worse than not being able to buy the five stocks that are driving the S&P 500? The ones that are driving it down.

Investor's Business Daily's analysis of S&P Global Market Intelligence's and MarketSmith's data shows that just 10 S&P 500 stocks, such as Charles Schwab (SCHW), Pfizer PFE and Johnson & Johnson JNJ, have wiped out more than $300 billion from shareholder wealth in the past year. The losses are especially painful because the S&P 500 is up 8.2% in this year, making investors $2.5 trillion wealthier.

If you have the wrong stocks in your portfolio, it will go the wrong direction.

The S&P 500 is a hot commodity for the first-quarter earnings season. Adam Turnquist is chief technical strategist at LPL Financial. He said that the index had a return of over 5% in the past month. This was one of the largest rallies since 2000. "Can the rally go on?"

Losers stifle the S&P 500 rally

This year, the S&P 500 has risen by more than 8%. It's easy for people to believe that everyone is a winner. That's not the case.

S&P 500 stocks are down 203 so far this year. More than 40% of stocks in this popular index are now lower than when they began the year. Some of these declines are very painful. This year, more than 60 S&P500 stocks have dropped by 10% or more.

This means that the S&P 500 gains are largely due to a small number of huge winners. When you consider the entire market, S&P 500 stocks are only up by 3.5% or less than half the index's rise.

Many of those losses are due to massive losers.

Assessment of the S&P 500 Financial Damage

You can easily ignore some of S&P 500's worst performers. First Republic Bank is indeed the worst S&P 500 company. This year, it's been down by nearly 90%. The stock is worth only $2.4 billion and therefore does not have much impact on the S&P 500.

Schwab is a different story. First Republic's stock has lost 37% more value than Schwab this year. In this case, we're dealing with a $97-billion company. A stock this large can have a greater impact when it drops this much. Investors have lost over $60 billion of market value so far this year. This is three times the amount of money investors have lost in First Republic this year.

Health Care Headaches

The health care sector is the one that has caused the most losses for investors this year, after the financials. Ironic, perhaps. Investors bought health care stocks late in 2022 thinking they would protect them from a possible recession.

The safety trade in healthcare is failing despite the fact that the recession is always "six-months away". Health care stocks are half of the S&P 500's worst performers this year. Pfizer, which is the leading manufacturer of the Covid-19 vaccination that put the world back to working, has lost nearly 20% in value this year. This decline has wiped out $55 billion of market value.

Pfizer's health care bet is not the only one that has failed this year. Johnson & Johnson is down 6.2% in this year, due to litigation surrounding talc claims. This may not seem like much but when you consider that Johnson & Johnson was worth $462 billion at the beginning of the year, this loss has wiped out more than $28 billion.

Then there is the drop of nearly 19% in CVS Health. This loss of wealth to shareholders was more than 25 billion dollars.

Another reason to follow leaders is the huge difference between winners and losers of the S&P 500.

The S&P 500's biggest market value losers this year

Company Ticker % of total revenue for the year. First Republic Bank (FRC), 89.2%, -$19.8 in Financials

Sources: S&P Global Market Intelligence, IBD