Here’s Why I’m Buying One of the Most Hated Stocks on the Planet
This reviled 'dog' is exactly the type of name that's in play when using a very popular strategy. And it's my first buy of 2025.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
You don’t hear much about the "Dogs of the Dow" strategies these days. This series of strategies involves buying last year's worst-performing stocks in the Dow Jones Industrial Average at the start of the year, and holding the shares for one full year.
It’s a defensive strategy, and playing defense isn’t popular these days. Risk has been rewarded in recent years. There’s an entire generation of investors that hasn’t experienced a serious downturn, a fact that makes me wonder how they’ll handle it when it comes.
During difficult times, the Dow provides a less-volatile alternative to the other major indexes. For example, In 2022, the S&P 500 lost 19.44%, while the Dow declined by just 8.78%.
The Dow Jones Industrial Average hasn’t had a double-digit negative year since 2008, when it fell by 33.84%. That figure bested the S&P 500, which fell by 38.49% that year.
One version of the strategy involves buying only the worst-performing stock in the index. When I looked at the charts, I was surprised to see that Boeing BA, the worst stock on the Dow in 2024, actually has a decent chart, and has outperformed the major indexes for the past month.
I know what you’re thinking: How can Ed even mention Boeing when it’s one of the most hated stocks on the planet? Boeing shares lost about 30% in 2024, while the S&P 500 gained 23.3%.
Believe it or not, Boeing is exactly the type of name that might be in play when using this strategy. Boeing is so widely reviled that it just might surprise us in 2025.
While Boeing had a rough year, it beat the indexes soundly in December, gaining nearly 14%. Shares of the Virginia-based airplane manufacturer and defense contractor recently hit a four-month high.
In mid-December, the stock climbed above its 200-day moving average (red) for the first time in nearly a year. Boeing will be my first buy of the new year.
We use charts to find that diamond in the rough. Part of this process involves looking beyond what we assume to be true about the stock.
We’re all aware of Boeing’s troubles, but the stock had a great December. Why did this happen?
Since retail traders normally aren’t able to move the market, I’d speculate that one or more institutions have decided to buy the stock.
We can only speculate whether that buying will continue. If it doesn’t, the stock will slide back beneath its key moving averages, and we will know it is time to exit the trade. If the buying does continue, we may have boarded Boeing just before takeoff.
At the time of publication, Ponsi was long BA.
