1.98 0.0 (0.0%) Sell

FRED continues its fall as more investors loose confidence

13 min read

FREDS INC underperformed broader market today. It returned 0.0% to close at 1.98. It's recent 5 day performance has been +27.27%, +0.79%, +4.33%, +1.13% and -0.37%.

[Themes containing FRED]

FRED showed a down trend over the last 3 months. During this period FRED returned -7.91% and saw a maximum drawdown of -42.44%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in FRED till volatility reduces and a clear trend emerges.


FRED has been underperforming the SP500 index in recent time, after having outperformed till 21 Dec, 2016. Over the last 2 years 11 months and 9 days, FRED underperformed the SP500 index on 54% days.

FRED returned losses on 54% days in the last three months. During this time, it delivered on average 0.0% per day. It delivered it's worst daily return of -21.43%, during this period, on Thursday, 13 Dec, 2018. There was initially a bullish trend during this period which started on 24 Sep, 2018 and went on till 2 Oct, 2018. The bullish trend returned +4.01% to investors. This was followed by a bearish trend that started on 19 Nov, 2018 and ended on 26 Nov, 2018. This bearish trend lost -10.02% of investor capital.

On monthly basis, FRED delivered profits and losses in equal number of months. FRED delivered profits less regularly than SP500 index. FRED significantly outperformed SP500 index in Jun 2018, when it returned +61.7% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. FRED had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.

Many folks think they aren't good at earning money, when what they don't know is how to use it.
-- Frank A. Clark

FRED 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 FRED's volatility from 14 Sep, 2018 to 3 Oct, 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 FRED has significant negative skewness in it's return distribution. This indicates that FRED is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in FRED you may find it interesting to know that ABMD, TWTR and LULU are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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