The stock market’s rally has been impressive. The major indexes are now up about 40 percent from their recent lows, give or take a few percentage points. And for anyone who scooped up more speculative shares on weakness, the profits could be even higher.
Personally, I don’t ever recommend purchasing shares of companies with shoddy business models, consistently unprofitable operations, poor track records of caring about their shareholders, etc.
But I realize that many investors did buy these kinds of stocks as aggressive ways to play a rebounding market. And that’s why I wanted to make a particular point in today’s column to warn you about holding on to these companies in your portfolio.
Reason: I believe the easy gains have already been made, and the losses on any downside move could be very sharp and swift, erasing any profits that have piled up.
In Fact, the Very Definition of “High-Beta” Stocks
Is That They Make Outsized Moves BOTH Ways!
Typically speaking, the less stable a company is fundamentally, the greater the swings in its share price. That makes sense when you think about it …
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