Stock Market Ebbs and Flows and Duds

 I have been paying attention to the stock market since I was a little kid. Always fascinated by it. I first started owning stocks when I was just a teenager. I still have those stocks. Lately I have been thinking I should sell those stocks, take the money and invest in something else that isn't a dud.

Duds are definitely an issue for the stock market.

If a particular stock is a dud you will notice that it doesn't really go up in value very quickly, and tends to fluctuate around the same point for a long time.

Or goes down in value over the long term, proving that the Dud is particularly bad.

A good example of a Dud stock is Cabot Oil & Gas Corp (COG). During a 5 year period this stock fluctuates up and down, ebbs and flows, but overall continues to go down in value.

Why would anyone invest in a company like COG?

Someone who is a day trader might be interested in such a company, banking on investing one day and selling the next day when it hopefully goes up in value.

Another hallmark of a dud is low trading volume.

Today COG has a volume of 1.35 million in traded shares, but it is noon already... and the average trading volume for this stock is 9.35 million.

Average Trading Volume is calculated over the last 20 or 30 days (varies by source).

What this shows you is that for a $6 billion company COG is on a downwards trend and the volume of trades is dropping.

If a company's trading volume gets too low it becomes difficult to actually sell your stocks, because you end up trying to sell it and nobody is buying.

Now it should be noted that if you look at COG's long term gains over 10 years or more it looks a lot better.

Compared to the value of the stock during the 1990s it is actually doing very well as a company, but if you look at just the last 10 years what you see is some ups and downs and the value of the stock has stagnated.

Observe...

And this is why you want to research stocks before you buy them.

COG would have been a smart buy in 2004 to 2006, when it was on the upwards trend, but anyone really smart should have sold their stocks in 2013 or 2014 when the stock price soared.

Everything after that has been on a downward trend.

The stock was actually worth more in July 2011 than it is in July 2021. Anyone who bought the stock then, and did not sell it in 2013-2015, is probably feeling really dumb now.

Yes, it is still a $6 billion company, but it used to be worth over $12 billion. Five years from now it will probably only be worth $4 billion or less.

So it isn't just a Dud, it is a bit of a loser.

It is paying dividends on its earnings, so that is one upside. A total of $0.30 per share during 2020. During which time it has gone from being worth $21 to $15 per share. So the dividend is to compensate you for the fact the company has lost $6 per share worth of value. Oooo! Peanuts.

In general I should point out that I don't like oil stocks. They're too dependent on oil prices going up, and they inevitably come back down, at which point the oil companies see their own values rise and drop constantly. That might seem like a great idea for someone who is a day trader, but for long term investors it is a bad situation to get into because a lot of oil companies fall into the Dud category.

And as you may have noticed, I am looking for Darling Stocks, not Duds.