In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

Spoiler alert: Wachovia Corporation (NYSE: WB) is not the first financial stock we've scraped off the bottom of the S&P 500 barrel, and it will not be the last. You've already been treated to the gruesome horror stories of Fannie Mae (NYSE: FNM) and KeyCorp (NYSE: KEY); now, gather 'round the campfire to hear another spine-tingling, blood-curdling tale of subprime mayhem and write-down-related bloodshed.

What went wrong? At number 17 on our list of SPX underdogs, WB shed 73% of its value during the decade that ended June 30, 2008. And, if it weren't for that cutoff date, Wachovia might have snagged an even higher ranking on our roster. From its June 30 close at $15.53, the stock dropped as low as $7.80 by July 15.

The shares hit an all-time high of $65.94 in July 1998, and tapped their near-term peak of $60.04 in April 2006. After this last achievement, WB crawled west-by-southwest for more than a year, and did an amazing impression of a harmless downleg within its larger uptrend -- you know, until the whole subprime thing.

Fresh off its acquisition of A.G. Edwards in June 2007, Wachovia was poised to become one of Wall Street's major players. G. Kennedy Thompson, the bank's chairman and chief executive, may have tempted fate when he crowed on a conference call, "This is an end game for us." Unfortunately, Wall Street was about to endure one of the most painful years of its history. Just a few months later, the unrelenting grip of the credit crunch forced Wachovia to belly up to the Federal Reserve's discount window, along with its cash-strapped peers Citigroup (NYSE: C), JPMorgan (NYSE: JPM), and Bank of America (NYSE: BAC).

What next? Wachovia is hardly the only big bank struggling with massive write-downs and fundamental uncertainty, but it's been hit particularly hard by losses on its "Pick-A-Pay" mortgage portfolio. During four trading days this July, WB was slapped with no fewer than five price-target cuts, three downward revisions to its earnings-per-share estimates, two downgrades, and one hint of a future dividend cut. Plus, rumors have even hit the Street that sector peer Goldman Sachs (NYSE: GS) will buy the company at a discount -- a takeunder, as the kids call it.

The already-bleak picture grew a little more complicated on July 17, when securities regulators raided the St. Louis headquarters of Wachovia Securities as part of a broad investigation into questionable practices involving auction rate securities.

Under the circumstances, you might think newly appointed CEO Robert Steel is already craving a vacation ... but, after reporting an $8.86-billion loss during the second quarter, Steel told analysts on July 22 that he's not too concerned about Wachovia's share price. Instead, the chief said he plans to focus on running the company, and let the stock take care of itself.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the weekly video series Option Basics on SchaeffersResearch.com.