The party never started for FARM investors as it significantly underperforms
14 Dec, 201813 min read
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FARMER BROTHERS CO has destroyed investor wealth today. It returned -1.67% to close at 23.55. It's recent 5 day performance has been +1.1%, +0.42%, -0.13%, -1.5% and -3.23%.
FARM is currently in a down trend. Over the last three months 2 bearish signals have generated a profit of +10.41% for investors.
FARM has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, FARM underperformed the SP500 index on 50% days. Which indicates that on days FARM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
FARM returned losses on 59% days in the last three months. During this time, it delivered on average -0.22% per day. It delivered it's worst daily return of -4.39%, during this period, on Monday, 1 Oct, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 9 Oct, 2018. The trend delivered -8.13% losses to investors. This was followed by a bullish trend that started on 22 Oct, 2018 and ended on 24 Oct, 2018. This bullish trend delivered +4.04% to investors.
On monthly basis, FARM delivered losses in more months over the last year, than profits. FARM delivered profits less regularly than SP500 index. FARM was also a more risky investment than SP500 index as it's worst month in the last year, Sep 2018, returned -8.97% compared to -7.28% returned by SP500 index in Oct 2018. FARM had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -8.05%.
If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks.
-- John Bogle
FARM 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 fall in FARM's volatility from 18 Sep, 2018 to 19 Oct, 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 FARM has significant negative skewness in it's return distribution. This indicates that FARM is very risky for short-term investment and can significantly underperform for long durations.
SP500 index has more chance of extreme outcomes than FARM. Therefore, SP500 must receive a lower allocation than FARM in your portfolio. SP500 index usually has shorter drawdown period than FARM.
On a general note (since you are interested in FARM), three instruments that deserve special mention are DFBG, NIHD and PRQR. They have all outperformed the market and must be closely watched for investment opportunities.
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