Doubt in the minds of FTI investors as it delivered massive losses
11 Dec, 201813 min read
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TECHNIPFMC PLC delivered massive losses today. It fell by -1.81% to close at 20.59. During the last week it fell by -12.42% and saw a maximum drawdown of -12.42%.
Buy-and-Hold investors in FTI experienced a maximum drawdown of -36.72% over the last three months. It fell by -30.65% during this strong bearish 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 +27.18%.
FTI has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Dec, 2016 to 11 Dec, 2018. One must note that FTI is currently at it's worst performance to the SP500 index which makes it a bad investment candidate. Over the last 2 years 11 months and 7 days, FTI underperformed the SP500 index on 51% days.
FTI returned losses on 59% days in the last three months. During this time, it delivered on average -0.56% per day. It delivered it's worst daily return of -7.74%, during this period, on Thursday, 6 Dec, 2018. The longest stort-term trend during this period was 9 losing days, which started on 17 Oct, 2018 and ended on 29 Oct, 2018. This bearish trend lost -15.48% of investor capital.
During the last year FTI had 6 profitable months and 6 loss making months. FTI returned profits in fewer months than SP500 index. FTI was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -15.73% compared to -7.28% returned by SP500 index in Oct 2018. FTI had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered -38.77%. It is interesting to note that both FTI and SP500 index significantly outperform during months when quarterly/annual results are announced.
"Even though the quotes above come from some of the most intelligent people on Wall Street, the ideas behind them are both quite simple and insightful.
FTI is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in FTI's volatility from 19 Sep, 2018 to 11 Dec, 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 FTI has positive skewness in it's return distribution. This indicates that investors can expect FTI to make attempts to recover from drawdowns quickly. Which makes FTI a good candidate for momentum based trading on short-term bullish trends or counter-trends.
FTI has more chance of extreme outcomes than the SP500 index. Therefore, FTI must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than FTI.
On a general note (since you are interested in FTI), three instruments that have performed similar to FTI are LAND, NLSN and MANU. They must all be evaluated as alternative investment options and for diversification.
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