MW Wall Street's most hated stocks just outperformed the S&P 500 - despite the Iran war
By Brett Arends
Pariah Capital, an imaginary fund created by MarketWatch, has also outperformed the Nasdaq and most active fund managers during the Iran war
Pariah Capital, MarketWatch's imaginary fund, didn't expect the administration to launch a war, but we were prepared anyway.
Here at Pariah Capital, we didn't actually expect the administration to launch a war - or a military "excursion" - against Iran.
But we were prepared for all of this, anyway. Sort of. And that's why Pariah Capital - the imaginary fund created by MarketWatch that invests in stocks hated by Wall Street - is happy to report that we were able to beat the S&P 500 SPY, the Nasdaq COMP and most active fund managers during this one-month military excursion, and actually through the first quarter of the year.
Pariah is up 9% so far this year, while the S&P 500 is down 4% - even after that remarkable end-of-quarter rally on the final day of March. And Pariah has held its losses to just 1.5% during the war, by which we mean the month of March. The S&P 500 lost 5%.
It's not hard to see why: Pariah's bold 20% allocation to energy stocks and 20% allocation to Treasury bills, aka cash. Energy stocks went up when the war (or excursion) created an oil crisis seemingly out of thin air, and Treasury bills at least held their value.
When war broke out over the weekend beginning Feb. 28, we also congratulated ourselves on two other big positions: 20% each in global bonds and in supposedly reliable consumer-staples stocks, meaning the kinds of companies that make and sell consumer necessities rather than luxuries.
Financial theory, and conventional wisdom, would have said both would do comparatively well during the turmoil created by a war. But it was not to be. The consumer-staples exchange-traded fund VDC fell 7.5% during March, and bonds fell 2%. Both were hit by fears that the war, and the new energy crisis, would cause a big surge in inflation.
Our final 20% allocation, to stocks listed in London, took a beating in March - the U.K. small-cap fund EWUS fell 11% - although it did much better during the quarter as a whole.
I'm kidding (sort of). Pariah Capital is satire rather than straight humor, because it's a tongue-in-cheek exercise that illustrates something serious: the perils of Wall Street consensus, conventional wisdom and the herd mentality. Pariah Capital simply imagines how you'd do if you went out and bought the assets that Wall Street's big money managers liked the least.
The record shows: You'd do very well. And that includes this year.
OK, you could say I'm cheating with this particular column. This year's annual Pariah Capital column didn't appear until Feb. 3, so you couldn't actually have invested in it at the start of the year.
But Pariah has also outperformed the market since that column was published. More important, the real purpose of the column is to highlight the weaknesses of the Wall Street consensus, and the BofA global fund-manager survey that identified this year's most unpopular assets was conducted in early January. So it is absolutely correct that an equally weighted portfolio of the assets that Wall Street hated the most at the start of the year has outperformed the indexes.
Where does this leave Pariah for the next three quarters?
The huge stock-market rally of the past two days, ahead of President Donald Trump's expected declaration of peace, brings to mind an old Wall Street saying, "Buy on the rumor, sell on the news." But the most interesting information for Pariah won't come for another two weeks or so, when we get the first postwar fund-manager survey. Meanwhile, if the price action is anything to go by, bonds, U.K. stocks and consumer staples look even less loved today than they did at the start of the year.
-Brett Arends
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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April 02, 2026 11:47 ET (15:47 GMT)
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