Falling Knives: Should You Buy the Worst-Performing Stocks?

By July 10, the MOEX Russia Index had been falling for 18 consecutive weeks — the longest run of weekly declines in the indicator’s history. The market had lost roughly 26% from its March high.

Against that backdrop it is tempting to conclude that the sale of the century has begun. But a steep decline does not by itself make a stock a good buy. Market overview — BCS Express.

Who Ended Up at the Bottom

Since the start of 2026, the most notable laggards have been:

• ALROSA — around −45%;
• Polyus — around −38%;
• NLMK — around −34%;
• VK — around −30%;
• MMK — around −29%.

In individual cases the fall from previous highs was even deeper: Samolet, Segezha, Diasoft and Whoosh have each lost more than 80%.

Comparing all of these names over the same five-year window would be misleading, however: Diasoft shares only began trading in February 2024, and Whoosh in December 2022.

What Analysts See

There is no blanket answer along the lines of “buy everything that has fallen.” In Finam’s July 10 review, the shares were grouped by the reason behind the decline:

• NLMK and Severstal — a cyclical story. Analysts expected the steel cycle to bottom out in 2026, which made current levels potentially interesting;
• ALROSA — the crisis in the diamond market is not over, so catching the bottom may be premature;
• VK — a low price does not offset weak financial results and the risks facing shareholders;
• Polyus — after the news about a possible suspension of dividends until 2030, the uncertainty became too high for a clear-cut assessment.

This is not a ready-made shopping list. It is an illustration of why an identical percentage drop can mean completely different things.

A Cheap Stock Is Not the Same as a Good Investment

What matters is the reason for the decline. If earnings have fallen temporarily because of an industry cycle, debt remains manageable and the business can wait for a recovery, the drop may create an opportunity.

If, on the other hand, a company has been loss-making for years, is increasing its debt, diluting shareholders or cannot explain how it will return to growth, a low price can always go lower.

Before deciding, check:

• earnings and free cash flow;
• debt levels and interest costs;
• the outlook for the industry;
• dividend policy and the risk of a share issue;
• whether there are real signs of a turnaround, rather than just another price low.

The Takeaway

Even professionals rarely time the bottom of a market precisely. It makes more sense to look for a viable business with a clear future than for the cheapest share on the screen — and not to mistake a technical bounce for a sustained recovery.

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This material is for informational purposes only and does not constitute investment advice.