Eliminating laggard positions and realizing losses can be an unpleasant task, but just like weeding a garden it is necessary.
One of the key aspects of effectively managing a momentum or trend following strategy is removing laggards from your portfolio and replacing them with stronger stocks. For some, this can be an uncomfortable process. Most of us are inherently loss-averse and selling the laggards often means realizing losses. Often, it also means selling formerly strong names that have broken down, even if you have a hunch that they might turn around. As we’re now just over halfway through 2025, this is an opportune time to weed out any laggard positions you may have. To make this process a little easier, we’ve put together a list of some of 2024 strong performers that have fallen out of favor this year. Our list is made up of S&P 500 stocks that outperformed the benchmark last year, gaining more than 30%, but have fallen out of favor and now have weak technical attribute ratings.
TSLA Tesla Inc. ($307.18) - Autos and Parts – TSLA was one of one the biggest beneficiaries of the post-election rally last year and finished the year up more than 60%. However, since then, things have turned south as the Cybertruck has disappointed and revenue across all models has declined significantly from last year. As with many stocks, TSLA is trading well of its 2025 lows, but after violating its trend line earlier this week, it has fallen to an unacceptable 2 for 5 TA rating. TSLA has overcome major challenges before, so we wouldn’t rule out a potential turnaround, but at this juncture the weight of the technical evidence is negative.
TPL Texas Pacific Land Trust ($1,047.35) - Real Estate – TPL had the biggest 2024 gain of any stock on our list, as it was up over 110%, even after a significant sell-off at the end of the year. TPL recovered from the April sell-off with the rest of the market, giving multiple consecutive buy signals. However, while the major indices continued to climb and are now trading at all-time highs, TPL dropped sharply in June, falling back to into a negative trend and is trading only about 5.5% off its 2025 low. With the stock now sitting on multiple consecutive sell signals with a weak 1 for 5 technical attribute rating, it is a prime candidate to eliminate from your portfolio if you have exposure.
Eliminating laggard positions and realizing losses can be an unpleasant task, but just like weeding a garden it is necessary.
