Not even every blue-chip stock was able to follow the broad market higher last month.
If you like to buy raw chips at affordable prices, there is no shortage of them right now. While the broader market finally began to decline again last month, many common stocks continued to decline, adding to the losses of January and February.
Wise investors know that this weakness translates into an opportunity, of course. Just because the shares of a reputable company have declined, however, does not necessarily mean that it is worthwhile to enter right now. It is quite possible that the recent sale is the latest leg of the biggest pullback.
With that as the backdrop, here's a closer look at the Dow Jones Industrial Average's ( ^DJI -0.59% ) three biggest losers from March, as well as a decision on whether they are buys as a result of their recent pullbacks.
March's worst Dow performers
That bad play is not bad. They are noteworthy, however, given their basic reasons.
The crash of Boeing may coincide with the crash of a Boeing 737-800 passenger plane in China on March 21. Although the cause of the crash has not been determined and the plane in question was not one of the 737 MAX crashes. planes, the disaster has raised concerns that Boeing's reputation has been irreparably damaged.
As for Walt Disney, a combination of internal conflicts, customer strikes, the temporary closure of the Shanghai COVID-19 theme park in Shanghai, and the growth of negative media are all undermining stock performance. Investors collectively say it is more than what the company can afford, in addition to sales that have taken place since March last year.
Investors aren't being irrational
Don't misunderstand: As a general rule, it's better to buy good stocks when they go "on sale" than it is to purchase them at full price. As was the case with March's biggest losers among the Nasdaq Composite ( ^IXIC -2.28% ) and the S&P 500 ( ^GSPC -1.10% ) though, there's something bigger happening with stocks right now. Recent sell-offs aren't being driven by unnecessary worry. They're a reflection of investor reasoning regarding each company's foreseeable future.
Take Home Depot, for example. While the slowdown in the real estate market is not a threat to the real estate developer, it does bring with it wind that could cause unexpected damage to the company's top and bottom lines. The market hates uncertainty almost as much as it hates the disappointing results.
Then there is Boeing. Although the 737-800 crash used by China Eastern Airlines is one of the most used passenger aircraft in the world and boasts a healthy safety record, the aircraft manufacturer cannot be involved in any gaffe design yet. Investors may wait to start buying again honestly until Boeing clears out any possible debt. That, however, can take months to determine.
As for Disney, while its involvement in politics is nothing new, the collapse from that involvement seems to be getting worse. Protesting parents seem more determined not to do business with the company than ever before, while workers are more courageous than ever to demand that the company's management respond openly to their concerns. Such a controversy leaves investors wondering if profits are still going up, at a time when Walt Disney's recommended broadcast services are not shooting well across all cylinders. Also, it can take months for the market to regain its previous level of luxury of owning Disney stock.
Always check the broad market's true temperature
This isn't always the case, of course. Sometimes stocks suffer major tumbles because panicked investors sell first without thinking about the long-term fallout of troubling headlines. That was certainly the case in January, when the omicron variant of COVID-19 started to circulate in earnest, seemingly threatening another round of global shutdowns. Russia's invasion of Ukraine beginning in late February also spooked investors. But in retrospect, it's now clear the only thing to fear about those matters was the fear they sparked. Neither has actually proven to be a true crisis, save the continued pain at the gas pump.
It's not exactly unmerited fear driving Disney, Boeing, and Home Depot shares lower though, or any other sinking stocks for that matter. Investors are actually being pretty levelheaded here. You'd be wise to take the hint they're dropping for certain stocks.
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Courtesy Grizler.com
