GATX investors looking to preserve capital
14 Dec, 201813 min read
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GATX CORP ranked among the worst performers on Friday. It returned -1.96% to close at 73.68. It is currently trading -17% below it's 52 week high of 89.08.
Buy-and-Hold investors in GATX experienced a maximum drawdown of -18.61% over the last three months. It returned -12.55% 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 +6.01%.
GATX has been underperforming the SP500 index in recent time, after having outperformed till 20 Jul, 2018. Over the last 2 years 11 months and 10 days, GATX outperformed the SP500 index on 53% days.
During the last three months GATX delivered profits on 55% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.68%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -6.49%) was on Tuesday, 23 Oct, 2018. There was initially a bearish trend during this period which started on 9 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -8.16% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +9.77% to investors.
On monthly basis, GATX delivered profits in more months over the last year, than losses. GATX delivered profits less regularly than SP500 index. GATX was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -13.48% compared to -7.28% returned by SP500 index in Oct 2018. GATX had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both GATX and SP500 index significantly outperform during months when quarterly/annual results are announced.
"I finally know what distinguishes man from the other beasts: financial worries.
GATX is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in GATX's volatility from 1 Oct, 2018 to 24 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 GATX 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.
SP500 index has more chance of extreme outcomes than GATX. Therefore, SP500 must receive a lower allocation than GATX in your portfolio. SP500 index usually has shorter drawdown period than GATX.
On a general note (since you are interested in GATX), three instruments that deserve special mention are PRQR, TNDM and HEAR. They have all outperformed the market and must be closely watched for investment opportunities.
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