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No, it's quite possible that delisted stocks behaved differently even on 1-day basis. For example, if I recommended only very risky stocks, the ones that stayed
by in3d 5y ago
No, it's quite possible that delisted stocks behaved differently even on 1-day basis. For example, if I recommended only very risky stocks, the ones that stayed listed and survived likely paid off very well (let's say +40% in a year), while the ones that are no longer listed mostly went bankrupt (-100%). 1-day returns would show a very large difference on average.
- vannevar 5y agoIn theory that could be true. But as others have pointed out, there are many other reasons for delisting besides bankruptcy. The scenario you paint is possible, but I still think it's unlikely---less than 15% of the stocks involved were omitted, and that includes not only delisted stocks but stocks omitted for other reasons, so the bankrupt firms would likely be much less than 15% of the total. And while stocks are unlimited on the upside, they can't go below zero on the downside, so there's a limit to how much those omitted losers could drag down the big outlying winners.