162.81 -0.64 (-0.39%) Sell

Waiting to invest in GD? Avoid at the moment as it was among the worst performers

13 min read

GD was among the worst performers today. On a longer term basis, investors in GENERAL DYNAMICS CORP made -0.05% per day. Tuesday's performance of -0.39% was a underperformance compared to it's daily average.

[Themes containing GD]

GD showed a strong bearish trend over the last 3 months. During this period GD delivered -20.2% and saw a maximum drawdown of -21.41%. There was a short signal during this period which returned +17.7%.


GD has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 23 Apr, 2018 to 25 Oct, 2018. Over the last 2 years 11 months and 14 days, GD underperformed the SP500 index on 47% days. Which indicates that on days GD underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months GD was mostly loss making and delivered on average -0.34% per day. It's best return during this period (of +3.37%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -7.73%) was on Wednesday, 24 Oct, 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 -14.96% of investor capital.

The last 12 months saw GD's investors making profits in 5 months and incurring losses in 7 months. GD was less consistent in delivering monthly returs than SP500 index. GD was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.02% compared to -7.75% returned by SP500 index in Dec 2018. GD had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -8.74%.

It's not the situation, but whether we react (negative) or respond (positive) to the situation that's important.
-- Zig Ziglar

GD 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 GD's volatility from 8 Oct, 2018 to 11 Dec, 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 GD has significant positive skewness in it's return distribution. This indicates that investors can expect GD to recover from drawdowns quickly. Which makes GD a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in GD derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in GD you may find it interesting to know that SCI and ADC have both performed similar to GD and can be considered by investors as alternative investment options.

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