68.44 +1.33 (+1.94%) Sell

FSV does a dead cat bounce, it's still too early to buy into it

13 min read

FIRSTSERVICE CORP (Foreign) delivered good returns today. It grew by +1.94% to close at 68.44. During the last week it returned -7.58% and saw a maximum drawdown of -7.93% before bouncing back.

[Themes containing FSV]

Buy-and-Hold investors in FSV experienced a maximum drawdown of -21.14% over the last three months. It returned -19.28% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +11.41%.


FSV has been underperforming the SP500 index in recent time, after having outperformed till 27 Aug, 2018. Over the last 2 years 11 months and 14 days, FSV outperformed the SP500 index on 51% days.

During the last three months FSV was mostly loss making and delivered on average -0.33% per day. It's best return during this period (of +2.66%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.83%) was on Monday, 17 Dec, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 10 Oct, 2018. The trend delivered -7.4% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +5.73% to investors.

On monthly basis, FSV delivered profits in more months over the last year, than losses. FSV delivered profits less regularly than SP500 index. FSV was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -12.77% compared to -7.75% returned by SP500 index in Dec 2018. FSV had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

If you are standing on the platform when the train has pulled away, It's not going to back up for you. When a bull market takes off, It's not going to back up for you.
-- Don Connelly

FSV 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 FSV's volatility from 25 Sep, 2018 to 25 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that FSV 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.

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

On a general note (since you are interested in FSV), two instruments that deserve special mention are TNDM and TPNL. They have significantly outperformed the overall market this year.

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