Colorado stocks as a group managed to lose even more last year than U.S. stocks, which suffered their worst year since the Great Depression.
The Bloomberg Colorado Index, a basket of more than 100 stocks based in the state, lost 51 percent of its value, with the majority of stocks in the state down 60 percent or more.
By comparison, the Standard & Poor’s 500 shed 38.5 percent in 2008, its worst showing since 1931, when it fell 43.3 percent.
“The market tsunami was wide and deep, and it hit smaller financial stocks that were leveraged particularly hard,” said Fred Dickson, chief market strategist for D.A. Davidson in Lake Oswego, Ore.
The Parent Co., an online retailer of children’s products, was the state’s worst performer, shedding 99.1 percent of its value and filing for bankruptcy protection Sunday.
Niwot shoemaker Crocs, Boulder- based Aero Grow International and Denver-based ethanol maker Bio Fuels also lost 90 percent or more of their market value in 2008.
Large corporations were not immune from the carnage. Shares of Level 3 Communications shed 77 percent, Janus Capital Group lost 75.6 percent, and Dish Network lost 67.3 percent last year.
Through the first half of the year, it didn’t look like things would end so badly for Colorado stocks. The Bloomberg Colorado Index was down 6.04 percent, versus a 12.8 percent decline for the S&P 500.
That changed in late summer when commodity prices, which had run up, sharply reversed course after investors realized that the credit crisis would dent economic growth globally. That hurt the natural-resource companies that make up a large share of Colorado’s corporate base.
The collapse of Lehman Brothers in September froze debt markets and caused investors to flee companies that relied on borrowed funds.
That hurt media and telecom companies in the state, Dickson said.
“There are very few people out there who truly understood the magnitude and the pervasive nature of the overleveraging of a variety of assets,” said Ernie Ankrim, chief investment strategist with Russell Investments in Tacoma, Wash.
Only three Colorado stocks managed to provide investors with a positive return — Royal Gold, Emergency Medical Services and CSG Systems International.
Royal Gold, which gained 61.2 percent last year, benefited from two strategic deals that greatly increased its royalty-generating assets.
Gold prices ended the year about where they began, but volatility left investors eager to find a safer way to invest in the precious metal, said Tony Jensen, president and chief executive of Royal Gold.
“We have a business model that is a lower-risk model. A lot of investors have deleveraged and gone for dividends,” he said.
