2014 was a pretty good year to be an investor, with the S&P 500 once again delivering double-digit returns and the bond market holding firm despite (ultimately unfounded) fears of rising interest rates. Even the U.S. dollar had a banner year in 2014, hitting a seven-year high in December. But in investing, for every person who buys, there’s someone on the other end selling. And where there’s a winner, a loser is not far from sight. Here are the five worst investments of the past year.
The collapse of the price of oil was perhaps the biggest economic story of the year. But oil's fall didn't just affect commodity traders. It also spurred the stock declines of the biggest losers in the S&P 500, like offshore drilling contractor Transocean (RIG) and fracking company Denbury Resources (DNR), whose stocks declined 45% and 60% in 2014, respectively.
Russia and Ukraine
Along with oil, conflict in Eastern Europe dominated the headlines in 2014. The Russian invasion of Ukraine beginning in February rattled world markets and further destabilized an already shaky Ukrainian economy. Economic sanctions imposed on Russia by the West, coupled with falling oil prices, sent the Russian economy down the tube alongside Ukraine. Both the Russian RTS index and the Ukrainian Equities index fell more than 40% in 2014.
Insurance giant Genworth Financial (CSCO) suffered growing pains in 2014 as it tried to master the increasingly important business of old-age insurance. The company's stock fell by more than 45% in 2014, making the it the biggest loser outside the energy sector in the S&P 500 this year. The company posted record losses as a result of a shortfall in reserves against claims for long-term care, sending its shares downward.
The second worst-performing stock outside the oil and gas exploration sector was Avon (AVN) . The direct-selling company is facing soft consumer spending issues at home, and a host of problems abroad, including an economic slowdown in Brazil, a main profit center for the company. Avon also recently settled a case with the Justice Department for $135 million over bribery allegations related to its business in China.
Few companies have felt the painful consequences of the recent consumer electronics revolution more than Mattel (MAT). In an age of paper-light tablet computers and hyper-realistic video games, traditional game makers like Mattel simply do not have the products to compete. Mattel's flagship doll, Barbie, is illustrative of the company's problems. Barbie revenues have shrunk by more than 10% in each of the four most recent quarters, sending Mattel stock down by more than 35% in 2014.