14.75 -0.1 (-0.67%) Sell

Stop-loss on the minds of APTS investors as it destroyed investor wealth

13 min read

PREFERRED APARTMENT COMMUNITIES INC is a falling knife that can bleed you if you catch it today. It lost -0.67% to close at 14.75. During the last week it lost -2.38% and saw a maximum drawdown of -2.38%.

[Themes containing APTS]

Buy-and-Hold investors in APTS experienced a maximum drawdown of -21.56% over the last three months. It lost -20.1% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +10.28%.


APTS has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, APTS underperformed the SP500 index on 48% days. Which indicates that on days APTS underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months APTS was mostly loss making and delivered on average -0.32% per day. It's best return during this period (of +6.77%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -11.11%) was on Tuesday, 6 Nov, 2018. There was initially a bullish trend during this period which started on 12 Oct, 2018 and went on till 16 Oct, 2018. The bullish trend returned +4.15% to investors. This was followed by a bearish trend that started on 17 Oct, 2018 and ended on 22 Oct, 2018. This bearish trend lost -8.5% of investor capital.

APTS had 5 profitable and 7 loss making months over the last year. During the last year, APTS underperformed SP500 index on monthly return basis. APTS was also a more risky investment than SP500 index as it's worst month in the last year, Jan 2018, returned -17.43% compared to -7.28% returned by SP500 index in Oct 2018. APTS had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -16.23%. It is interesting to note that both APTS and SP500 index significantly outperform during months when quarterly/annual results are announced.

The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.
-- T.T. Munger

APTS is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in APTS's volatility from 5 Oct, 2018 to 8 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 APTS has significant positive skewness in it's return distribution. This indicates that investors can expect APTS to recover from drawdowns quickly. Which makes APTS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than APTS. Therefore, SP500 must receive a lower allocation than APTS in your portfolio. SP500 index usually has shorter drawdown period than APTS.

On a general note (since you are interested in APTS), V is a large cap that deserves to be closely tracked for investment opportunities.

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