Joy for FSM investors as it manages to marginally outperform broader market
12 Dec, 201813 min read
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FORTUNA SILVER MINES INC (Foreign) showed marginal outperformance on Wednesday. It increased by +0.61% to close at 3.28. On a day when the overall market breadth was 35%, it closed higher than 75% of the market. In comparison, the benchmark SP500 index closed today at +0.54%.
Buy-and-Hold investors in FSM experienced a maximum drawdown of -29.27% over the last three months. It delivered -23.54% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +23.54% for investors.
FSM has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 19 Jan, 2016 to 18 Aug, 2016. Over the last 2 years 11 months and 8 days, FSM outperformed the SP500 index on 50% days. Which indicates that on days FSM outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.
During the last three months FSM was mostly loss making and delivered on average -0.4% per day. It's best return during this period (of +4.91%) was on Wednesday, 14 Nov, 2018. While it's worst loss in the same period (of -5.9%) was on Monday, 12 Nov, 2018. The longest stort-term trend during this period was 4 losing days, which started on 8 Nov, 2018 and ended on 13 Nov, 2018. This bearish trend lost -13.71% of investor capital.
The last 12 months saw FSM's investors making profits in 4 months and incurring losses in 8 months. FSM was less consistent in delivering monthly returs than SP500 index. FSM was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -16.27% compared to -7.28% returned by SP500 index in Oct 2018. FSM had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jul 2018 to Nov 2018) during which period it delivered -52.92%.
Greed is not a financial issue. It's a heart issue.
-- Andy Stanley
FSM 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 surge in FSM's volatility from 5 Oct, 2018 to 11 Oct, 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 FSM 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.
FSM has more chance of extreme outcomes than the SP500 index. Therefore, FSM must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than FSM.
Based on your interest in FSM you may find it interesting to know that AYTU has shown remarkable performance and deserves to be on every investors' watchlist.
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