DCM investors not showing any loss of confidence as it pauses to catch its breath

DCM LTD delivered lacklustre performance on Tuesday. It lost -1.0% to close at 74.5. On a day when the overall market breadth was 70%, it closed higher than 36% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0036%.

[Themes containing DCM]

Buy-and-Hold investors in DCM experienced a maximum drawdown of -10.46% over the last three months. It grew by +2.62% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

DCM has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, DCM underperformed the NIFTY-50 index on 54% days.

During the last three months DCM delivered losses on 58% days. However, it still managed to end this period in a profit. It's best return during this period (of +6.72%) was on Friday, 21 Dec, 2018. While it's worst loss in the same period (of -3.56%) was on Friday, 16 Nov, 2018. There was initially a bearish trend during this period which started on 29 Nov, 2018 and went on till 4 Dec, 2018. The trend delivered -3.08% losses to investors. This was followed by a bullish trend that started on 28 Dec, 2018 and ended on 1 Jan, 2019. This bullish trend delivered +5.1% to investors.

DCM had 4 profitable and 8 loss making months over the last year. During the last year, DCM underperformed NIFTY-50 index on monthly return basis. DCM was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Mar 2018, returned -10.3% compared to -6.42% returned by NIFTY-50 index in Sep 2018. DCM had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Aug 2018 to Nov 2018) during which period it delivered -15.53%. It is interesting to note that both DCM and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
-- George Soros

DCM is becoming less volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant surge in DCM's volatility from 25 Oct, 2018 to 30 Oct, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that DCM has significant negative skewness in it's return distribution. This indicates that DCM is very risky for short-term investment and can significantly underperform for long durations.

NIFTY-50 index has more chance of extreme outcomes than DCM. Therefore, NIFTY-50 must receive a lower allocation than DCM in your portfolio. NIFTY-50 index usually has shorter drawdown period than DCM.

Based on your interest in DCM you may find it interesting to know that GET&D has delivered similar performance as DCM and can be considered as an alternative investment candidate (to DCM).