- I bought the three worst-performing stocks
on the S&P 500 in 2020.
And I also bought the three best-performing stocks
on the S&P 500 in 2020.
And we're gonna do an experiment to see whether the test
of buy low, sell high holds true on those stocks in 2021.
But before we get into it, if you want the most honest
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Okay, so let's get into it.
Let's discuss buying the best and worst-performing stocks
of 2020 on the S&P 500,
why we're doing it and what we're trying to get out of it.
And really what we're trying to do here
is we're trying to test that whole theory
about buying low and selling high.
And the three best-performing stocks on the S&P 500
are arguably at high valuations
because they performed very, very well over the last year.
And obviously, the three worst-performing stocks
are at low valuations because they didn't do very well.
So what we're gonna try to do is test what happens
if we buy three of each,
and then ultimately see whether the ones
that we're buying at low values performed better
than the ones that are being bought at high values.
And I'll give you my predictions on that
at the end of this video.
So in order to pick our test portfolio,
we picked the three best-performing stocks
and the three worst-performing stocks.
Now, we excluded Tesla because Tesla was only part
of the S&P 500 for the last eight days of the year.
However, if it was included in this portfolio,
it would be the number one performer of 2020 on the S&P 500,
that is undisputable.
It made significant gains in 2020.
It had a stock split and it has continued
to go up and up in value, making Elon Musk
the wealthiest man in the US, if not in the world.
Not only did we buy the three best and worst performers,
we had a minimum value that we would invest.
So we wanted to make sure
we had at least $100 worth of each stock.
Now for the three top performers,
this was easy because all three of the top performers
had stock valuations for a single share that were over $100.
And for the three on the bottom,
we had to buy multiple shares
in order to get to that $100 minimum threshold.
Now for the purposes of setting up this portfolio,
we opened up a Questrade account
because we were able to get $50 in free trades with them.
So there is no trading costs factored into these values.
By the way, if you wanna get $50 in free trades,
I'll put a link in the description below
where you can sign up for a brand new Questrade account
and get $50 in free trades.
Also remember, that when you sign up
for a Questrade account, purchasing ETFs is free,
which is a huge benefit of opening up a Questrade account.
So again, link in the description below.
Obviously, I make a little bit of money
if you hit that link in the description below,
and obviously you get $50 in free trades.
So it's a win-win for both of us.
So the three top performing stocks
that we've purchased were Nvidia, Etsy and PayPal,
Nvidia is obviously a chipmaker,
PayPal is a payment gateway,
the most popular one in the world,
and Etsy is the crafting marketplace
that has pretty much blown up
and become a pretty cool marketplace
to buy some pretty cool stuff.
Fun fact, my wedding ring was purchased off of Etsy
from a designer in California, pretty cool.
Now the three worst-performing stocks
were Carnival Cruise Lines
to nobody's surprise because I think cruises were probably
the industry that had the most negative impact
from COVID of all industries.
And the other two were energy related stocks.
The first was Occidental Petroleum
and the other was TechnipFMC,
Occidental being a oil company
and Technip being a, some sort of a technology company
in the oil industry that provides oil services.
I didn't do a lot of research into either of these companies
because that wasn't the point.
Obviously, I would never make
an investment decision based on purchasing
the worst or best performers.
This is just an experiment.
So I didn't delve deep into either of these stocks
and what exactly they do,
what their performance has been like
and why they performed so poorly over the last year.
We just went with the three worst performers
and these are them.
Now our cost basis was as follows.
We bought Nvidia for $551.92,
we bought Etsy for $182.12.
We bought PayPal for $238.45.
And on our three worst-performing side,
we bought Carnival Cruise Lines for $20.20,
Occidental for $19.84 and Technip for $11.70.
Now we've owned these stocks for a couple of weeks so far,
so far we've had two that have performed very very well.
Etsy is up about 15% and Occidental Petroleum
is up about 13%,
which is quite surprising given the shift
from Republican power to Democratic power.
We've also had two stocks, one in the top performers
and one in the bottom performers that have done poorly.
So Nvidia is down about 3%,
and TechnipFMC is down about three and a half percent.
And then Carnival Cruise Lines and PayPal
are both up about two and a half percent.
So as of right now,
the way things are looking is our worst performers of 2020
are up about 5.33%,
and our best performers of 2020 are up about 2.2%.
So right now, the worst performers of 2020
are out to an early lead.
Now I've put these all together in a portfolio
in Google Sheets that I will make available to you.
So I'll put a link in the description below.
You can jump in there at any time that you like,
and check out what is happening with both portfolios,
the three top and the three worst performers
and see which one is winning.
And I suspect that this will change over time.
Now, one of my guesses about what will happen
with these two portfolios is,
I fully suspect that one of the three worst performers
of 2020 is going to have some sort of financial crisis.
I fully expect that one of them is going to go down
in absolute flames,
I think it might be Carnival Cruise Lines,
because if things don't get back to normal, pretty soon,
I can't see that company sustaining for a very long time,
or one of the two oil companies could potentially
do very poorly as well.
But I have a feeling
that one of them is gonna have some sort of a catastrophe,
and the other two will have to make up for the losses
on that single stock.
Now, that being said, I still think that my poor performers
are going to outperform the good performers.
And the reason why is because I think that
for Nvidia, Etsy and PayPal,
they've had pretty significant amounts of growth over
the last year.
And they're probably, if my guess is correct,
they're probably going to be pretty consistent
and pretty stable in their price points for most of 2021.
So I think that the three worst performers
are probably going to win
with one of them having some sort of catastrophic event.
And I think that the baseline of our top performers
is going to be pretty much flat for 2021.
Now, this is anybody's guess, you know,
we can go out and we can try to make predictions
on what's gonna happen with all these stocks,
but really, all we're doing is a simple experiment
to see if really poor performers have the ability
to bounce back.
And if really good performers have the ability to continue
to grow way beyond some of their best-performing years.
And what we'll do is we'll come back
to this midway through the year
or perhaps at the end of the year.
And we'll just take a look and see which ones did the best.
Was it the best performers or the worst performers?
Or was their previous year's performance not an indicator
of what would happen in the following year?
I'm really interested to see what happens.
Again, this is just for fun, don't go buying these stocks
on my recommendation.
This is purely an experiment for basically YouTube views.
Now in a future video, what I'm gonna do
is I'm going to give you a better investment strategy
than buying the three worst and the three best performers.
What I'm gonna do is do a video
on the Ray Dalio investment portfolio strategy
where we purchase ETFs in such a way that it is designed
to minimize our risk and hopefully get a big upside
for the years where there is a big increase in stock values.
And that is coming up in a future video.
But I don't recommend buying the best and worst performers
in the S&P 500 as an investment strategy.
Again, this is just an experiment.
And it is for fun, it is designed to get YouTube views.
So if you're finding these videos interesting,
if you're finding that there's a little bit
of entertainment value and a little bit of education value,
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We'll see on the next video, hope you enjoyed this one
and we'll talk to you soon, cheers.