AMAT investors hurt by serious losses
14 Dec, 201813 min read
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APPLIED MATERIALS INC significantly underperformed on Friday. It fell by -3.14% to close at 32.65. It is currently trading -47% below it's 52 week high of 61.61.
AMAT is currently in a bearish trend. Over the last three months 2 bearish signals have generated a profit of +9.89% for investors.
AMAT has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 15 Jan, 2016 to 9 Mar, 2018. Over the last 2 years 11 months and 10 days, AMAT outperformed the SP500 index on 54% days.
During the last three months AMAT was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +7.51%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -7.59%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 6 losing days, which started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -16.87% of investor capital.
During the last year AMAT had 5 profitable months and 7 loss making months. AMAT returned profits in fewer months than SP500 index. AMAT was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -14.24% compared to -7.28% returned by SP500 index in Oct 2018. AMAT had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -35.94%. It is interesting to note that both AMAT and SP500 index significantly outperform during months when quarterly/annual results are announced.
Not everything that can be counted counts, and not everything that counts can be counted.
-- Albert Einstein
AMAT is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in AMAT's volatility from 17 Sep, 2018 to 20 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that AMAT has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in AMAT derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than AMAT. Therefore, SP500 must receive a lower allocation than AMAT in your portfolio. SP500 index usually has shorter drawdown period than AMAT.
Based on your interest in AMAT you may find it interesting to know that ~BASICMATERIALS and CSFL have both performed similar to AMAT and can be considered by investors as alternative investment options.
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