Ask Matt: What's the worst stock of the year?

• Apollo Group is worst-performing stock in S&P 1500 this year
• There were clues that shares of for-profit educators were under pressure as long ago as 2010
• GAO report questioning recruiting practices was stain on entire industry

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: What has been the worst stock this year, and did investors have warning?

A: One of the best ways to win in investing is avoiding big mistakes.

So far this year, the biggest mistake has been owning shares of Apollo Group. Shares of the for-profit education company have lost a crushing 62% of their value, making them the worst-performing current member of the Standard and Poor's 500 index this year. Apollo Group operates the University of Phoenix.

Investors may not have known shares were in for this much of a beating in 2012, but there were clues there was trouble.

The for-profit educators came under intense government scrutiny as long ago as 2010. In August of that year, the Government Accountability Office released a report that questioned the recruiting practices of the entire for-profit education system.

The investigation left a long-lasting stain on the entire industry. Later, the controversy grew to a point showing that many students of companies in the industry had trouble repaying their student loans.

The controversy was enough to put government funding of students of companies in the industry into question and scare off investors. The company responded in 2010 reiterating its plans to better protect the interests of students. The stock's P-E ratio fell to 7 times earnings at the end of 2010, half of what it was the prior year.

It isn't just speculation, though, dragging down shares of Apollo this year. Investors have reacted to weakening profit and revenue. During Apollo's fiscal 2011, which ended in August, revenue fell 4%. During that year, the company's profit rose 3.4%, well below its growth rate of 2008 and 2009, serving as a harbinger of trouble. The fundamentals have since worsened, with the company's net income in fiscal 2012 tumbling 26%. The P-E has fallen further.

There may not have been a giant sign saying "Avoid this stock." But investors who took the time to notice the subtle clues of trouble leading into this year probably had somewhat of an inkling that 2012 wasn't going to be the best year for Apollo.