35.74 -0.18 (-0.5%) Sell

DHI investors looking to exit as part of sectoral rotation

13 min read

DHI has destroyed investor wealth today. On a longer term basis, investors in HORTON D R INC made -0.01% per day. Tuesday's performance of -0.5% was a underperformance compared to it's daily average.

[Themes containing DHI]

Buy-and-Hold investors in DHI experienced a maximum drawdown of -22.23% over the last three months. It delivered -16.22% during this strong bearish 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 +13.84%.


DHI has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 3 Jan, 2018 to 8 Nov, 2018. Over the last 2 years 11 months and 7 days, DHI underperformed the SP500 index on 48% days. Which indicates that on days DHI underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months DHI was mostly loss making and delivered on average -0.26% per day. It's best return during this period (of +3.77%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -8.97%) was on Thursday, 8 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 21 Nov, 2018 and went on till 29 Nov, 2018. This bullish trend returned +6.99% to investors.

The last 12 months saw DHI's investors making profits in 5 months and incurring losses in 7 months. DHI was less consistent in delivering monthly returs than SP500 index. DHI was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -14.83% compared to -7.28% returned by SP500 index in Oct 2018. DHI had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year. It is interesting to note that both DHI and SP500 index significantly outperform during months when quarterly/annual results are announced.

All intelligent investing is value investing - acquiring more than you are paying for. You must value the business in order to value the stock .
-- Charles Thomas Munger

DHI 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 DHI's volatility from 13 Sep, 2018 to 24 Sep, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that DHI 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 DHI derivatives at this moment can consider 'Married Put' options strategy to receive better risk-adjusted returns.

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

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

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