Prayers for DDS investors as it destroyed investor wealth
13 Dec, 201813 min read
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DILLARD'S, INC. was among the worst performers today. It delivered -3.08% to close at 62.58. During the last week it delivered -1.67% and saw a maximum drawdown of -4.85% before bouncing back.
DDS is currently in a bearish trend. Over the last three months 2 bearish signals have generated a profit of +3.14% for investors.
DDS has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 9 Mar, 2016 to 7 Nov, 2017. Over the last 2 years 11 months and 9 days, DDS underperformed the SP500 index on 49% days. Which indicates that on days DDS underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months DDS was mostly loss making and delivered on average -0.29% per day. It's best return during this period (of +4.42%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -14.83%) was on Thursday, 15 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +12.03%) started on 21 Nov, 2018 and went on till 28 Nov, 2018 while the bearish trend (which returned -8.92%) started on 4 Oct, 2018 and went on till 10 Oct, 2018.
The last 12 months saw DDS's investors making profits in 4 months and incurring losses in 8 months. DDS was less consistent in delivering monthly returs than SP500 index. DDS significantly outperformed SP500 index in Feb 2018, when it returned +20.71% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. DDS had a longer winning streak of losing months than SP500 index. It went down in 6 straight months (from Jul 2018 to Dec 2018) during which period it delivered -38.1%.
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DDS 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 fall in DDS's volatility from 14 Sep, 2018 to 25 Sep, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that DDS has significant positive skewness in it's return distribution. This indicates that investors can expect DDS to recover from drawdowns quickly. Which makes DDS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in DDS derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than DDS. Therefore, SP500 must receive a lower allocation than DDS in your portfolio. SP500 index usually has shorter drawdown period than DDS.
On a general note (since you are interested in DDS), three instruments that deserve special mention are I, TNDM and ECYT. They have all outperformed the market and must be closely watched for investment opportunities.
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