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Stock Strategist

Value Creators and Destroyers in 2008

We take a look at the best and worst performers of the first half of 2008.

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The first six months of 2008 have drawn to a close, and it's time to assess the damages and gains this new year has brought to the market. Who are the winners and losers of 2008 so far? As we've done in the past, we've examined the dollar changes in stock market values to derive our value creators and destroyers lists. To calculate the market capitalization for both Dec. 31, 2007, and June 20, 2008, we took year-end 2007 shares outstanding, adjusted for splits, and multiplied it by the share price at both dates.

There are always problems with these types of screens, and knowing the potential weaknesses is important in interpreting the results. Our method eliminates market capitalization gains solely from share issuance, including stock option exercises, acquisitions, and the capital infusions needed at so many banks. If an acquisition was dilutive to the existing shareholders, it is reflected in the numbers. However, there are drawbacks. Our methodology does not adjust for share repurchases, which means we might overstate the current market cap. Also, as a result of looking at total market capitalization, the results are biased toward large-cap stocks. However, even taking into account the limitations stated above, we believe this is the best method to demonstrate what would have happened to the investor who held on to these stocks for the past six months.

Jaime Peters does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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