DOV is a falling knife, continues to bleed every investor trying to catch it
14 Dec, 201813 min read
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DOVER CORP significantly underperformed today. It returned -2.32% to close at 76.32. It's recent 5 day performance has been -0.27%, -0.04%, +0.22%, -1.64% and -2.86%.
DOV is currently in a down trend. The current bearish signal has generated a profit of +7.78% for investors in the last three months.
DOV has been underperforming the SP500 index in recent time, after having outperformed till 20 Mar, 2018. Over the last 2 years 11 months and 10 days, DOV underperformed the SP500 index on 47% days. Which indicates that on days DOV underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months DOV was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +1.75%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -3.39%) was on Wednesday, 10 Oct, 2018. There was initially a bearish trend during this period which started on 5 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -7.97% losses to investors. This was followed by a bullish trend that started on 1 Nov, 2018 and ended on 7 Nov, 2018. This bullish trend delivered +4.75% to investors.
On monthly basis, DOV delivered losses in more months over the last year, than profits. DOV delivered profits less regularly than SP500 index. DOV was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -16.71% compared to -7.28% returned by SP500 index in Oct 2018. DOV had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -32.84%. It is interesting to note that both DOV and SP500 index significantly outperform during months when quarterly/annual results are announced.
An investment in knowledge pays the best interest.
-- Benjamin Franklin
DOV is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in DOV's volatility from 17 Sep, 2018 to 10 Dec, 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 DOV has significant positive skewness in it's return distribution. This indicates that investors can expect DOV to recover from drawdowns quickly. Which makes DOV a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in DOV derivatives at this moment can consider 'Calendar Spread' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than DOV. Therefore, SP500 must receive a lower allocation than DOV in your portfolio. DOV usually has shorter drawdown period than the SP500 index.
On a general note (since you are interested in DOV), two mid cap instruments that deserve special mention are SQ and LULU. They have significantly outperformed the overall market.
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