2021 was a defining year for a new generation of investors on the Tel Aviv Stock Exchange. Following the pandemic, an unusual combination of zero interest rates, abundant liquidity, a rapid economic recovery and surging corporate profits created the perfect conditions for a market boom.
The result was a broad-based rally in stocks, a wave of new retail investors entering the capital market and an unprecedented number of initial public offerings. The TA-125 index ended the year with a gain of approximately 30%, trading volumes surged, and nearly 100 companies completed IPOs.
But five years later, it is clear that not all of the market’s stars justified the enthusiasm surrounding them. In fact, most of the stocks that led the gains in 2021 failed to outperform the broader market over time, while some caused investors significant losses.
The comparison has gained renewed relevance following the rally recorded during 2025 and the first half of 2026. Many investors and market participants believe the recent surge resembles the atmosphere of 2021: sharp price increases that are difficult to explain solely through economic fundamentals and are driven largely by optimistic expectations for future growth.
The question now is whether investors are once again chasing the stars of the moment, or whether the lessons of the previous boom have been absorbed.
An analysis of the performance of the 10 stocks that were among the market’s biggest winners in 2021 paints a clear picture: being a stock market star during a boom does not guarantee long-term returns.
From the beginning of 2022 through today, the TA-125 index, the benchmark index of the Tel Aviv Stock Exchange, delivered a cumulative return of 98.5%. Only three of the 10 leading stocks from 2021 managed to outperform the index. Six of them recorded negative returns, despite the fact that a passive investment in the index nearly doubled over the same period.
Bonus BioGroup was among the biggest disappointments, losing 77.8% of its value since the end of 2021. Israel Corporation and ICL also declined significantly, falling 39.3% and 34.9%, respectively.
Bonus BioGroup illustrates the risks of so-called “dream stocks”, companies whose valuations are driven primarily by expectations of future breakthroughs rather than established business performance.
At the height of the 2021 boom, Bonus entered the TA-125 index despite having no significant revenue. Its valuation was based largely on expectations that its coronavirus treatment would become a commercial success, alongside hopes surrounding its regenerative medicine technology.
Those expectations did not materialize. The coronavirus treatment failed to become a growth engine, the company continues to generate limited revenue and remains loss-making. As a result, its market value declined from approximately NIS 1.5 billion at the end of 2021 to about NIS 327 million today.
Bonus was not alone. ElectReon, which developed technology for roads capable of wirelessly charging electric vehicles, also entered the index during the boom despite having limited commercial activity and no significant revenues or profits. It became another example of how market enthusiasm can propel young companies into leading indexes before their business models are fully proven.
There were, however, exceptions. Several companies continued to create substantial value for investors. Delek Group was the strongest performer, generating a cumulative return of 348% since the end of 2021. It was followed by Camtek with a 212.4% return and Nova with 203.9%, two semiconductor companies that benefited from the surge in demand driven by the artificial intelligence revolution. Y.H. Dimri recorded a more modest return of 32.6%.
Overall, the 10 stocks that were considered the stars of 2021 generated an average return of 67.9% over the past four and a half years, approximately 30 percentage points below the performance of the TA-125 index.
The gap highlights the difference between established companies with proven business models, profitability and stable cash flows, and younger companies whose valuations rely primarily on expectations of future growth.
The continued success of companies such as Delek Group, Nova and Camtek was not accidental. While their valuations benefited from the 2021 rally, they were supported by existing businesses, profits and growth trends that continued after the market enthusiasm faded. Their performance was also helped by broader macroeconomic trends, including the artificial intelligence-driven boom in demand for semiconductors and energy.
By contrast, companies such as Bonus BioGroup benefited primarily from investor optimism and expectations that future developments would become commercial products. When those expectations were not realized, valuations declined accordingly.
The lesson is familiar: a boom can lift almost any stock, but over time markets tend to reward companies that can demonstrate actual business performance.
The tendency to chase star stocks is well documented in academic research. Researchers refer to such companies as “lottery stocks” or “glamour stocks”, companies that tell a compelling story, experience high volatility and offer investors the possibility of extraordinary returns.
This combination becomes particularly attractive during periods of market euphoria, when investors are more willing to pay for the possibility of finding the next big winner.
2 View gallery
From right: Gaby Waisman, President and CEO of Nova, Rafi Amit, Chairman of PriorTech, Camtek, and Idan Wallace, CEO of Delek Group
(Photos: Gilad Kavalerchik, Raanan Tal, Yonatan Bloom)
A prominent study by Turan G. Bali, Nusret Cakici and Robert Whitelaw, published in 2021 in the Journal of Financial Economics, examined stocks that experienced extreme short-term gains, known as “MAX stocks.” The researchers found that these stocks tended to generate lower returns in the future, even after accounting for factors such as company size, momentum and other risks.
The researchers argued that investors effectively pay a premium for the possibility of a major payoff, similar to buying a lottery ticket despite the low probability of winning.
Other studies have reached similar conclusions. Research published in Applied Economics found that retail investors are often attracted to stocks receiving significant media attention, companies with futuristic narratives or those experiencing sharp price increases. This demand can push valuations beyond underlying economic value, after which prices tend to correct.
Studies in Australia have also found that so-called star stocks tend to underperform the broader market over time.
Another study published in the Journal of Financial and Quantitative Analysis examined why professional fund managers continue to hold such stocks. The researchers concluded that managers do not necessarily view these companies as the most attractive investments, but sometimes keep them in portfolios because clients expect to see popular names represented.
In other words, even professional investors are not immune to the appeal of market stars, despite evidence that history often struggles to justify their highest expectations.
