The first will be last: Bear mauls last year's winners

Q: Why are stocks that were market's leaders last year lagging now?

A: Letting your winners run hasn't paid off as many investors hoped it would.

Last year, a number of companies saw their stocks rocket as investors saw no end of growth in sight for them. But many of these past winning companies are handing investors massive losses this year as the market turns conservative and looks for less risk.

Shares of Internet darling Google goog are down 50% this year, doing even worse than the broad market. Same goes for companies such as Apple aapl, GameStop gme and Freeport-McMoRan Copper and Gold fcx.

Investors are getting a brutal reminder that stocks with the highest valuations are often the ones that pay most dearly in bear markets. That's one reason studies have shown the best-performing stocks over the long term often aren't the ones with the brightest prospects, but rather, the unloved "value stocks" that investors aren't willing to pay much for.

It's also a reminder that if all your friends are talking up a company and its stock, it's probably best to take a pass. You could make more money buying a diversified basket of beaten-up value stocks that, as a group, have more upside and less downside risk.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.

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