Back in January 2012, I wrote an article on 9 of the S&P/ASX 50 (ASX: XFL) (INDEXASX: XFL) stocks that had been heavily sold off – losing at least 12% of the share price, and as much as 41% from their 52-week peaks.
Here's a cut-down version of the table, showing the share price fall and the dividend yields available at the time.
| Company | Div Yield | Fall from peak |
| QBE Insurance Group Ltd (ASX: QBE) | 11.01% | 41% |
| BHP Billiton Limited (ASX: BHP) | 2.64% | 25% |
| Computershare Limited (ASX: CPU) | 3.62% | 25% |
| Origin Energy Ltd (ASX: ORG) | 3.64% | 21% |
| Westpac Banking Corp (ASX: WBC) | 7.56% | 19% |
| CSL Limited (ASX: CSL) | 2.61% | 20% |
| Australia and New Zealand Banking Group (ASX: ANZ) | 6.69% | 19% |
| Worleyparsons Limited (ASX: WOR) | 3.12% | 18% |
| Sonic Healthcare Limited (ASX: SHL) | 5.19% | 14% |
| Woolworths Limited (ASX: WOW) | 4.94% | 12% |
Source: Google Finance
In the article I suggested that these stocks were oversold purely as pessimism took hold, perhaps offering an opportunity for investors to pick up stocks on the cheap. I also suggested that investors selling out of those stocks weren't doing themselves a favour.
Reflecting on the results, had investors bought an equal amount of shares in all 9 of those companies that day, reinvested their dividends and held their shares through to today, they would've handily beaten the index by 8.4% (both including dividends).
| Company | Return |
| QBE Insurance Group Ltd | 31.1% |
| BHP Billiton Limited | 1.4% |
| Computershare Limited | 78.2% |
| Origin Energy Ltd | 11.2% |
| Westpac Banking Corporation | 106.7% |
| CSL Limited | 44.7% |
| Australia and New Zealand Banking Group | 88.4% |
| Worleyparsons Limited | -56.0% |
| Sonic Healthcare Limited | 101.8% |
| Woolworths Limited | 38.0% |
| Average | 44.5% |
| Market (S&P/ASX 200) | 36.1% |
| Outperformance | 8.4% |
Source: Capital IQ
Now that's not complicated. No need to watch the market, no need to worry whether to sell, which stock to sell, buy more, switch into the 'latest hot stock', – basically tuning out the market noise.
It's also further proof that over the long term, if you buy a portfolio of quality stocks and hang onto them and not trade, the odds of you beating the market soar. Some may underperform the market (thank you Worleyparsons, Origin Energy, BHP Billiton and QBE Insurance), but the rest of the fairly diversified portfolio has performed admirably, resulting in market-beating returns.
