Search for alternative investments is on for GIL investors as it underperforms
11 Dec, 201813 min read
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GILDAN ACTIVEWEAR INC. (Foreign) delivered massive losses on Tuesday. It lost -1.82% to close at 31.84. It is currently trading +25% above it's 52 week low of 25.39 and is down only -6% from it's 52 week high.
Buy-and-Hold investors in GIL experienced a maximum drawdown of -7.21% over the last three months. It returned +5.19% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.
GIL has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 7 days, GIL underperformed the SP500 index on 47% days. Which indicates that on days GIL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months GIL was mostly profitable and delivered on average +0.09% per day. It's best return during this period (of +2.68%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -3.29%) was on Wednesday, 10 Oct, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 5 Nov, 2018. The bullish trend returned +6.13% to investors. This was followed by a bearish trend that started on 15 Nov, 2018 and ended on 20 Nov, 2018. This bearish trend lost -2.78% of investor capital.
GIL had 5 profitable and 7 loss making months over the last year. During the last year, GIL underperformed SP500 index on monthly return basis. GIL significantly outperformed SP500 index in Aug 2018, when it returned +14.81% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. GIL had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -10.92%. It is interesting to note that both GIL and SP500 index significantly outperform during months when quarterly/annual results are announced.
The challenge is not to pick the best investment. The challenge is to pick the right investment.
-- Don Connelly
GIL 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 GIL's volatility from 25 Sep, 2018 to 2 Nov, 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 GIL 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 GIL. Therefore, SP500 must receive a lower allocation than GIL in your portfolio. SP500 index usually has shorter drawdown period than GIL.
Based on your interest in GIL you may find it interesting to know that EHC is a small cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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