EEI investors looking to preserve capital
12 Dec, 201813 min read
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ECOLOGY & ENVIRONMENT INC ranked among the worst performers on Wednesday. It returned -0.97% to close at 10.25 which is it's 52 week low, down -29% from it's 52 week high.
EEI is currently in a down trend. Over the last three months 3 bearish signals have generated a profit of +21.17% for investors.
EEI has been underperforming the SP500 index in recent time, after having outperformed till 15 Mar, 2016. Over the last 2 years 11 months and 8 days, EEI underperformed the SP500 index on 49% days. Which indicates that on days EEI underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months EEI was mostly loss making and delivered on average -0.44% per day. It's best return during this period (of +7.63%) was on Wednesday, 26 Sep, 2018. While it's worst loss in the same period (of -4.84%) was on Friday, 16 Nov, 2018. There was initially a bullish trend during this period which started on 28 Sep, 2018 and went on till 3 Oct, 2018. The bullish trend returned +5.41% to investors. This was followed by a bearish trend that started on 16 Nov, 2018 and ended on 21 Nov, 2018. This bearish trend lost -12.95% of investor capital.
On monthly basis, EEI delivered profits and losses in equal number of months. EEI delivered profits less regularly than SP500 index. EEI was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -14.73% compared to -7.28% returned by SP500 index in Oct 2018. EEI had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both EEI and SP500 index significantly outperform during months when quarterly/annual results are announced.
The stock market is a discounter of all known information.
-- Kenneth Fisher
EEI 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 EEI's volatility from 1 Nov, 2018 to 20 Nov, 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 EEI 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.
SP500 index has more chance of extreme outcomes than EEI. Therefore, SP500 must receive a lower allocation than EEI in your portfolio. SP500 index usually has shorter drawdown period than EEI.
On a general note (since you are interested in EEI), two mid cap instruments that deserve special mention are AMD and LULU. They have significantly outperformed the overall market.
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